2012-12-21-15

"Patent trolls" cost many $29 billion last year

A recent study done by scholars at Boston University revealed that “patent trolls” cost individuals, organizations, and companies billions of dollars per year.

According to the study, $29 billion were put aside in 2011 by companies, among others, to obtain rights to patented ideas. Adding on to the immense cost mentioned above, there are “indirect” costs such as delays products, and loss of market share during the legal battles.

“This [$29 billion] figure does not include indirect costs to the defendants businesses such as diversion of resources, delays in new products, and loss of market share,” people involved in the study wrote.

Industry bodies that buy patents with the main goal of licensing them are one of the main culprits in the causing the huge expense. Also known as “non-practicing entities,” (NPEs) these firms don’t make the products related to the patents they own, and since they own many patents related to the work of other companies, individuals, and academic institutions they are also an obstacle for people who seek to make their innovative ideas a reality.

The BBC reported that 2,150 companies had to stage 5,842 legal battles against NPEs last year. Over half of the companies that had to put out the money to defend their patent rights last year were companies that earned less than $100 million per year. The direct costs of legal fees and indirect costs such as delayed products lead to less investment in research and development.

The authors of the study added that NPEs are causing society more harm than good because they cause stagnation in innovation by putting too much emphasis on protecting their “intellectual properties”.

Source: bbc.co.uk