Boston University School of Law

The Direct Costs from NPE Disputes

99 CORNELL L. REV. (forthcoming 2014)
Boston University School of Law Law and Economics Research Paper No. 12-34
(June 25, 2012)

James E. Bessen
Boston University School of Law

Michael J. Meurer
Boston University School of Law

Abstract

In the past, “non-practicing entities” (NPEs), popularly known as “patent trolls,” have helped small inventors profit from their inventions. Is this true today or, given the unprecedented levels of NPE litigation, do NPEs reduce innovation incentives? Using a survey of defendants and a database of litigation, this paper estimates the direct costs to defendants arising from NPE patent assertions. We estimate that firms accrued $29 billion of direct costs in 2011. Moreover, although large firms accrued over half of direct costs, most of the defendants were small or medium-sized firms, indicating that NPEs are not just a problem for large firms.

Keywords: patent, litigation, litigation cost, non-practicing entities, software patents

JEL Classifications: O31, O34, K41

 

Size: 368 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

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