The Private and Social Costs of Patent Trolls
Boston University School of Law Working Paper 11-45
(September 19, 2011)
James E. Bessen
Boston University School of Law
Jennifer Ford
Boston University School of Law
Michael J. Meurer
Boston University School of Law
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
JEL Classifications: O31, O34, K41
Size: 160 KB
James E. Bessen Contact Information
Director
Research on Innovation
202 High Head Road
Harpswell, ME 04079
Phone: (617) 531-2092
Email: jbessen@researchoninnovation.org
Lecturer in Law
Boston University School of Law
765 Commonwealth Avenue
Boston, MA 02215
Email: jbessen@bu.edu
Michael J. Meurer Contact Information
Boston University School of Law
765 Commonwealth Avenue
Boston, MA 02215
Phone: (617) 353-6292
Fax: (617) 353-3077
Email: meurer@bu.edu
Jennifer Ford Contact Information
Email: jlf@jlford.me
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