Patent trolling cost the US economy $29 billion

Rather than helping innovation, the US patent system is costing industry more than $29 billion a year in legal fees.

A Boston University study has been adding up the numbers and worked out that the legal action conducted by “patent trolls” cost US companies an estimated $29 billion during 2011.

During 2011, 2,150 companies mounted a total 5,842 defences in US cases against intellectual property companies that owned and licensed patents without producing any related goods of their own.

This means that the companies lost $29 billion in direct costs – legal and licensing fees.

The number was conservative and did not estimate indirect losses for defendants in things like delays in new products, loss of market share or the need to change products.

The figures have escalated since 2005, when the study found a total of 1,401 claims were $6.6 billion in direct costs.

Study authors James Bessen and Michael Meurer said increasing patent litigation in the US was a significant tax on investment in innovation.

To put the figure into perspective the total US spending on research and development is $249 billion in 2009 but it is still a big tax.

The report said that the costs of defending such legal action meant these organisations had less money to invest in their own research.

Bessen and Meurer said it was rubbish that asserting patents played a socially valuable role in enabling small inventors to realise greater profits from their ideas.

Their report said that patent lawsuits were a social loss and not a transfer of wealth as rights holders claim.