A recent study, published by James Bessen and Micahel Meurer of the Boston University School of Law examines the direct costs of patent litigation by “non-practicing entities” (NPEs), more commonly known as “patent trolls”. Their assessment is that the direct costs of patent litigation initiated by NPEs in the U.S. rose from $6.6B in 2005 (encompassing 1,401 claims) to $29B in 2011 (encompassing 5,842 claims). Earlier research from the same authors found that the the annual wealth lost by publicly traded companies in the U.S. was a staggering $80B in 2011.
The authors identify increasing patent litigation as “a significant tax on investment in innovation,” with the the direct result of organizations having less money to invest in their research with increasing resources being bled off into legal defense.
Bessen and Meurer reject the notion put forward by IP rights firms that asserting patents plays a socially valuable role in enabling inventors to realise greater profits from their innovations. Rather, the authors assert that patent lawsuits are a social loss and not a transfer of wealth as rights holders assert.