Two Charts That Show How Parasitic Patent Trolls Are Sucking More And More Money Out Of The Economy

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Earlier today the White House announced that they were taking a new, aggressive policy against patent trolls. 

Here's a White House summary of the modus operandi of patent trolls:

Innovators continue to face challenges from Patent Assertion Entities (PAEs), companies that, in the President’s words “don’t actually produce anything themselves,” and instead develop a business model “to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them.”  These entities are commonly known as “patent trolls.”

The idea is that you mire a company in patent lawsuits so that it's easier for the company to just cough up a settlement than waste vast amounts of money in the courts.

Anyway, you just need to look at the statistics to realize its about time that there was finally some attention paid to this parasitic industry.

However, the impact that these lawsuits have on actual businesses is only getting worse,

Based on data from a a 2012 study by James Benson and Michael Meurer, take a look at these two charts.

This one shows how the growth of patent troll litigation has exploded in size in six years alone. Most importantly, look at what is driving that growth.

Increasingly, small and medium sized firms — companies that don't have as many resources to defend themselves — have been targeted by patent trolls:

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patent trolls

Chart Walter Hickey/BI, Data from SSRN

Next, take a look at the combined legal, settlement and lawsuit resolution costs to actual businesses. In 2011, companies were forced to spend $29 billion on legal costs because of patent trolls. Worst of all, that's growing annually. 

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patent trolls

Chart Walter Hickey/BI, Data from SSRN



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