The Growing Problem of Patent Trolling

By: Lauren Cohen, Umit Gurun and Scott Duke Kominers

Format:Print

Abstract

The last decade has seen a sharp rise in patent litigation in the U.S., with 2015 having one of the highest patent lawsuit counts on record. In theory, this could be a consequence of growth in the commercialization of technology and innovation—patent lawsuits increase as more firms turn to intellectual property (IP) protection to safeguard their competitive advantages. However, the majority of recent patent litigation is driven by nonpracticing entities (NPEs), firms that generate no products but instead amass patent portfolios for the sake of enforcing IP rights afforded therein. We discuss new, large-sample evidence adding to a growing literature suggesting that NPEs—in particular, large patent aggregators—on average act as "patent trolls," suing cash-rich firms seemingly irrespective of actual patent infringement. This has a negative impact on future innovation activity at targeted firms. These results suggest a need to check the power of NPEs through changes in U.S. IP policy, in particular to screen out trolling early in the litigation process.

Keywords

Patent Aggregators; Patent Litigation; Patent Pools; Patent Trolls; Patents; Lawsuits and Litigation; United States

Citation

Cohen, Lauren, Umit Gurun, and Scott Duke Kominers. "The Growing Problem of Patent Trolling." Science 352, no. 6285 (April 29, 2016): 521–522. (Explanatory Video.)