The Private and Social Costs of Patent Trolls

James Bessen, Jennifer Ford and Michael Meurer

Working Papers from Research on Innovation

Abstract: In the past, non-practicing entities (NPEs) — firms that license patents without producing goods — have facilitated technology markets and increased rents for small inventors. Is this also true for today’s NPEs? Or are they “patent trolls” who opportunistically litigate over software patents with unpredictable boundaries? Using stock market event studies around patent lawsuit filings, we find that NPE lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010, mostly from technology companies. Moreover, very little of this loss represents a transfer to small inventors. Instead, it implies reduced innovation incentives.

Keywords: patent; litigation; litigation cost; non-practicing entities; software patents (search for similar items in EconPapers)
JEL-codes: K41 O31 O34 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-com, nep-ino, nep-ipr, nep-pr~ and nep-tid
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Citations: View citations in EconPapers (47)

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Persistent link: https://EconPapers.repec.org/RePEc:roi:wpaper:1103

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