Patent trolls cost the country’s top tech companies an estimated $29 billion last year, according to a new report. The Boston University School of Law study contends that the rise in opportunistic patent litigation is stifling innovation and harming inventors.
Patent trolls are “non-practicing entities” (NPEs) that do not directly use the patents they own to produce goods, but rather license them to other companies that do. Critics call these NPEs “patent trolls” because they often acquire patent rights just so they can use them to extract licensing fees.
Unfortunately, litigation by patent trolls is on the rise. Lawsuits have increased dramatically over the past several years, from $6.7 billion in 2005 to $12.6 billion in 2008 and more than $29.2 billion in 2011, according to the study.
“This figure does not include indirect costs to the defendant’s business such as diversion of resources, delays in new products, and loss of market share,” the researchers said.
The study also examined the nature of the claims. The researchers found that many are nuisance lawsuits that ultimately settle for a few hundred thousand dollars but still cost a significant amount of money to defend.
“The rapid growth and high cost of NPE litigation documented here should set off an alarm warning [to] policy makers that the patent system still needs significant reform to make it a truly effective system for promoting innovation,” the researchers conclude.
Source: PC World