The Private and Social Costs of Patent Trolls

35 Pages Posted: 19 Sep 2011 Last revised: 30 Sep 2012

James E. Bessen

Boston University - School of Law; Research on Innovation

Michael J. Meurer

Boston University - School of Law

Jennifer Laurissa Ford

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: September 19, 2011

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 Classification: O31, O34, K41

Suggested Citation

Bessen, James E. and Meurer, Michael J. and Ford, Jennifer Laurissa, The Private and Social Costs of Patent Trolls (September 19, 2011). Boston Univ. School of Law, Law and Economics Research Paper No. 11-45. Available at SSRN: https://ssrn.com/abstract=1930272 or http://dx.doi.org/10.2139/ssrn.1930272

James E. Bessen (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Research on Innovation ( email )

202 High Head Rd.
Harpswell, ME 04079
United States
617-531-2092 (Phone)

Michael J. Meurer

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States
617-353-6292 (Phone)
617-353-3077 (Fax)

Jennifer Laurissa Ford

affiliation not provided to SSRN ( email )

Paper statistics

Downloads
5,433
Rank
828
Abstract Views
37,061