Hate innovation? Have we got the industry for you.
Google Patents/Rebecca J. Rosen
If you're looking for a swell way to make a few bucks, here's an idea: buy up software patents, don't actually try and develop any products or sell anything, and then just sue people left and right for patent infringement. Congratulations. You're a parasite.
That's basically the only conclusion you can draw from a new study by James Bessen and Michael J. Meurer of Boston University which looks at the costs of patent litigation instigated by "non-practicing entities" (NPEs), the polite term for patent trolls. NPEs own patents, but don't actually use them to make goods or services that people would, you know, want. Rather, they use the patents to prevent other companies from creating goods or services that people might want. Lovely, really. The cost of this vital industry? $29 billion in 2011 alone, and that's just the direct legal costs, not even counting "various indirect costs ... such as diversion of resources, delays in new products, and loss of market share." The loss for the economy overall -- in terms of immeasurable opportunities -- is surely far greater.
In the past, Bessen and Meurer write, NPEs provided a service to small inventors who could not on their own defend their patents. But for the most part, that is no longer the case. NPE litigation has been a booming industry in recent years -- particularly in the software industry -- reaching 2,150 unique companies facing litigation in nearly 6,000 cases instigated by NPEs in 2011. A chart from the paper shows the growth of such cases in recent years: