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"Patent Troll" lawsuits cost defendants $29 billion in 2011

Wed 27 Jun 2012 7:51am GMT / 3:51am EDT / 12:51am PDT
HardwareLegal

Boston University study finds more small and medium-sized companies getting caught in "unprecedented" levels of litigation

Legal action brought by "patent trolls" in the US last year cost defendants a total of $29 billion.

The figure was released by a research team Boston University, which studied "non-practicing entities" (NPEs) that own and license patents with no involvement in production.

Historically, NPEs have helped smaller companies generate revenue from their inventions. However, while 63 per cent of the $29b in costs was incurred by larger companies, the "unprecedented" levels of NPE litigation at present have resulted in the majority of defendants being small and medium-sized companies.

There were 5,842 NPE cases in 2011, and the median company sued had annual revenue of $10.8 million. 82 per cent of companies had less than $100 million in revenue, and these companies comprised 50 per cent of all NPE cases.

"We find little evidence that NPEs promote invention overall," the study reads. "Publicly-traded NPEs cost small and medium-sized firms more money than these NPEs could possibly transfer to inventors. This reduces the net amount that firms of any size have available to invest in innovation."

The survey covered 82 companies and 1,184 defences. It is the first of its kind to include privately held companies, and cases that were settled before a lawsuit was officially filed.

2 Comments

Thomas Dolby
Project Manager / Lead Programmer

318 253 0.8
Hopefully more studies like this will start to spring up and we can start to overturn the power patent trolls have. The system is fundamentally broken and it's becoming clearer and clearer for everyone to see.

NPEs should be forced to have a plan for production and if they show little sign of being able to meet those targets, their patent should be stripped from them because it's just holding back innovation. On top of that there should really be new restrictions on what can and cannot be patented, Apple's infamous "swipe to unlock" patent is a great example.

Posted:A year ago

#1

Christopher Bowen
Editor in Chief

393 503 1.3
I'm surprised there hasn't been a larger call to clean up this type of litigation by larger companies - who have sway - to prevent this from happening... actually, no. Now that I think about it, they want that tool in their toolbox themselves (after all, Apple just had the Galaxy Tab 10.1 banned).

Posted:A year ago

#2

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