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Home | Blog | Patent Trolls Cost The Economy Half A Trillion Dollars since 1990

Patent Trolls Cost The Economy Half A Trillion Dollars since 1990

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I have previously estimated that the patent system imposes at least $42 billion in net loss to the economy annually (Costs of the Patent System Revisited). As Mike Masnick notes in his Techdirt post Patent Trolls Cost The Economy Half A Trillion Dollars, a stunning new study by James Bessen, Michael Meurer, and Jennifer Ford, The Private and Social Costs of Patent Trolls, concludes that companies sued by patent trolls have lost $500 billion from 1990 to 2010, with increasing annual costs of late, on the order of $80 billion per year over the last four years. It’s not clear how much of this cost would overlap with my conservative $42 billion annual estimate, but obviously not all of it can, as the sum is greater; and it does not even address non-”troll” wealth-destroying patent battles such as the smartphone wars between Microsoft, Google, Apple, Samsung, Motorola, RIM, and others.

My $42 billion estimate was intended to be conservative. I’d venture that even an estimate of $100 billion a year of net loss in the US economy alone due solely to patents is still conservative. That’s at least a trillion dollars of net loss in innovation and economic productivity every decade, people. A trillion here, a trillion there, pretty soon you’re talking serious money.

Stephan Kinsella is an attorney in Houston, director of the Center for the Study of Innovative Freedom, and editor of Libertarian Papers.

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