To many in the tech world, the idea that patent trolls are bad for business is a no-brainer. But just how bad? Two academics who have spent a large amount of time studying the damage patent trolls do, James Bessen and Michael Meuer, have released a new study arguing that trolls are costing the economy $29 billion a year in direct costs.
If you think you recently read a different number about the costs of patent trolling—a substantially higher one—you did. An earlier study by the same two academics measured indirect costs of patent troll lawsuits, using public companies' stock prices as a proxy for the damages. That study found those costs to be about $83 billion annually.
It's not surprising that the two numbers would be different or that the first one would be significantly higher, study author Michael Meurer explained in an interview. "Based on previous research, we thought the gap between the two might be even larger than it was," he said.
The $29 billion number comes from measuring the more straightforward costs associated with fighting off patent troll suits: those include legal fees going to lawyers, and the licensing fees paid in tribute to make the trolls go away (which nearly always get paid). The findings come from a relatively small sample of 83 companies, both small and large.
The study paints one of the clearest pictures yet of the impact patent trolls—more politely called non-practicing entities or "NPEs"—are having on the economy.
Even if the numbers are inflated, there's little doubt those costs are significant. The total spending of US businesses on research and development is $247 billion per year. So even if one only considers the direct costs of patent trolls, they may be sucking up more than 10 percent of the money that could be spent on R&D.
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Corruption and greed. Another reason IWTBF.
