Patent Trolls Cost The Economy Half A Trillion Dollars

from the ouch dept

Last month, in talking about an episode of Planet Money with James Bessen on it, we mentioned his new research suggesting that patent trolls evaporated half a trillion dollars in wealth. Now that research, done with Michael Meurer and Jennifer Ford has been released (thanks to Tim Lee for the pointer): The Private and Social Costs of Patent Trolls.

Note that this isn't trying to count "losses" like the entertainment industry in trying to make up numbers about what would have sold. This is a direct observation on value of companies sued by patent trolls, and looking at how much of their value evaporates in response to the lawsuits. The $500 billion number represents a total over 20 years -- from 1990 to 2010. But, even worse (and not surprisingly), the numbers show that this number has been going up. Over the last four years, the total decimation of value from patent troll cases has averaged over $80 billion per year. In other words, over $320 billion of that $500 billion came in just the last four years.

Does this mean that some of this money is being transferred to actual inventors? Nope. Again, the research finds otherwise. The incentive to inventors has not increased by nearly the same amount. The research points out that licensing companies could add value -- but that under the current system, they do almost certainly do not. And as the problem is getting worse, all Congress can do is pass some hapless reform bill that doesn't even deal with the patent trolls issue at all.

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  1. identicon
    Anonymous Coward, 20 Sep 2011 @ 4:48pm

    Re: Re: Re:

    If you take an econ 101 course, you know that there is such a thing as aggregate output. Government established monopolies reduce aggregate output which is bad for the economy because it means that we have fewer things. Remember, things are what we have economies for. We have economies so that we can have things. It's well known, from econ 101, that government established monopolies reduce the quantity of things that we have. That's bad.

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