Costs of the Patent System Revisited

09/29/2010Stephan Kinsella

In my 2007 post What Are the Costs of the Patent System? (discussed in “Reducing the Cost of IP Law“) I tried to estimate the cost of the patent system (see also my reply to David Friedman in the thread to “Volokh’s David Post: The High Cost of Copyright”; Yet Another Study Finds Patents Do Not Encourage Innovation; and There’s No Such Thing as a Free Patent).

I concluded there is at least a $31 billion a year net loss to the US economy from the patent system. Take a look a this fascinating graphic from Anatomy of a Patent Litigation. It estimates about $31 billion a year as the cost of patent litigation in the US. These cost estimates are not astounding. What is astounding is that anyone thinks this mercantilist statist monstrosity is libertarian or free market.

Update: Note, my previous estimate was based on a conservative assumption that patent litigation costs $20B a year. The more recent statistics as indicated in the chart is $11B higher. That means my original estimate of $31B net loss should be more in the $42B net loss per year range.

Author:

Stephan Kinsella

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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