Patent Trolls Cost US Economy $29 Billion Yearly

It turns out that patent trolls aren't just annoying. They damage our economy, too. In fact, according to James Besson ad Michael Meuer, two academics from Research on Innovation and Boston University School of Law, every year patent trolls cost the US economy $29 billion.

For comparison, Google generated a a little over $3 billion in 2011. Keep in mind that these are direct costs, too. A separate study by the same researchers looked at more indirect costs. That one found an even higher number: $89 billion annually.

The $29 billion is associated directly with the cost of fighting off patent trolls including licensing fees, lawyer costs, etc. It was determined from a sample size of just 83 companies across the board in size. The two researchers also contacted 250 companies about how many patent troll-related lawsuits they had to fend off. The number came out to 1,184, or 4.736 per company. That's a lot of apparent violation.

Most of the cost comes from licensing agreements, however. Companies spent on average $7.27 million to end an NPE lawsuit, while smaller ones spend the more modest $1.33 million.

These numbers are a little disturbing. Companies in the US spend around $250 billion on research and development every single year. We're talking about a significant chunk of that going to defending new innovations. And every dollar a company can't spend on their product, or every idea that must be scrapped because it could ambiguously thought to infringe on an incredibly obscure and vague patent hurts consumers.

Our current patent system needs an overhaul. It just isn't up to the task of dealing with the modern tech world, who have turned patents into a weapon to suppress creativity rather than protect it. And things are only going to get worse. Something needs to be done before trolls cost the US its position in the world economy.

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