Report: Is Innovation being Stifled by Frivolous Lawsuits of Patent Trolls?

  • Looking at a database of over 1,600 patent troll lawsuits compiled by Patent Freedom, a team of Boston University researchers estimate that these suits have cost companies some $500 billion since 1990. These costs include not only legal fees and payouts to plaintiffs, but indirect costs such as employee distraction, legal uncertainty, and the need to redesign or drop key products.
  • The authors of the study also estimate that the original inventors received less than 10 percent of the “defendant’s lost wealth.”
  • Additionally, they found that software patents accounted for approximately 62 percent of the lawsuits (while a mere two percent of suits were related to drug or chemical patents, and only six percent involved mechanical patents).
  • The article concludes that the patent system is becoming a disincentive to innovation. “These results are important because the patent system is supposed to reward companies who invest in innovation,” suggests Ars Technica. “Yet thanks to the growing blizzard of frivolous patent lawsuits against technology companies, the patent system is actually becoming a net disincentive to innovation, especially software. We hope Congress and the Supreme Court are paying attention.”

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