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Previously, “non-practicing entities” (NPEs), typically referred to as “patent trolls,” have helped small inventors make money from their inventions. Is that this true today or, because of the unparalleled amounts of NPE litigation, do NPEs reduce innovation incentives? Utilizing a survey of defendants along with a database of litigation, this paper estimates the direct costs to defendants as a result of NPE patent assertions. We estimate that firms accrued $29 billion of direct costs this year. Although large firms accrued over 1 / 2 of direct costs, the majority of the defendants were small or medium-sized firms.
Furthermore, a test of openly listed NPEs signifies that little from the direct costs represents a transfer to small inventors. This new version from the paper features a answer critics.
Keywords: patent, litigation, litigation cost, non-practicing entities, software patents
JEL Classification: O31, O34, K41
Recommended Citation: Recommended Citation
Bessen, James E. and Meurer, Michael J., The Direct Costs from NPE Disputes (June 28, 2012). 99 Cornell L. Rev. 387 (2014) Boston Univ. School of Law, Law and Financial aspects Research Paper No.