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

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.

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Matthew Handrahan avatar
Matthew Handrahan: Matthew Handrahan joined GamesIndustry in 2011, bringing long-form feature-writing experience to the team as well as a deep understanding of the video game development business. He previously spent more than five years at award-winning magazine gamesTM.
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