The Meteoric Ascent of the Patent Troll and the Devastating Consequences for Innovation

By Neuro Bonkers | December 5, 2012 |

Today it is perfectly legal for companies to buy and sell the rights to unlimited numbers of ideas, a company is not required to have any interest in making these ideas a reality. It is perfectly legal for companies to sit on patents and wait for others to create before either suing the creator or charging licensing fees. The following pair of quotes is pulled directly from the promotional material on the website of just one prolific patent troll:

“$2 Billion+ cumulative licensing revenue”

“70,000 IP assets acquired and nearly 40,000 in active monetisation programmes”

In fact it is not just legal, patent trolling is an industry on a colossal scale. According to research recently published by Boston University School of Law, last year patent trolls won a cool $29 Billion. One of the most worrying findings of research in to patent trolls is that the mere threat of a suit is enough to put the frighteners on and make creators pay up:

“The average legal cost to defend a patent case is $420,000 for small and medium sized companies and $1.52 million for large companies. The average settlement costs are $1.33 million for small and medium companies and $7.27 million for large companies.”

It appears that a vast majority of the money acquired by “non practicing entities” is creamed off, according to the research by the Boston researchers:

“no more than a quarter (of the direct spending by defendants ) could possibly represent a flow to fund innovative activity”

Read more: The Meteoric Ascent of the Patent Troll and the Devastating Consequences for Innovation | Guest Blog, Scientific American Blog Network.

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