Patent Troll Fact Sheet

• FTC collected $458 million from an antitrust settlement in 2015 [1]

• Intellectual capital in some form, including patents, accounts for 55% of GDP, and “intangible assets” such as corporate intellectual property, goodwill, and brand recognition account for 80% of the value of US public companies today. [2]

• Modern patent systems give incentives to inventors to undertake costly investments in time, effort, and resources to generate innovations in hopes of realizing potential profits from them. [3]

• More than 80% of gains in US productivity in the early 2000s could be traced to the development and application of new ideas and technologies (in particular IT) [4]

• Up to 60% of pharmaceutical-research projects that eventually lead to new discoveries would not have occurred without patent-based incentives. [See Thomson Reuters]

• In a 2005 study, Yale economist William Nordhaus estimated that about 4% of the total present value of social returns to innovation is captured by innovators. [5]
  • Most of the benefits of technological change are passed on to consumers rather than captured by producers.

• “Many blame (patent trolls) for a majority of the problems with the patent system. But they bring only a minority of patent suits: 17% of high-tech patent suits in the last eight years”. [6]
  • “Share of hardware patent NPE suits (26%) was nearly triple that of financial patent NPE suits (9%)”
  • In only 8% of suits did a large firm sue a small one (predation profile)
  • Taken from a study conducted by Colleen Chien from Santa Clara University of Law
  • NPEs are defined as trolls in this article

• Only 5% of patents are the subject of licensing and 1% of litigation
  • Mark A. Lemley, Rational Ignorance at the Patent Office, 95 NW. U.L REV. 1495, 1507n.55(2001)

• “Lower upfront costs mean lower barriers to entry. Patents can therefore be viewed as increasing entry and competition by lowering the cost of market entry for upstream specialists”
  • From article "Elves or Trolls? The role of nonpracticing patent owners in the innovation economy"

• The number of specialist biotechnology firms grew from a handful in 1975 to 4414 globally in 2007
  • Ernst and Young (2008), Beyond Borders: Global Biotechnology Report 2008. [7]
  • Greater number of upstream specialists

• Between 1995 and 2001, median damage awards granted to NPEs versus practicing entities were $5.2 million to $6.2 million, respectively, and this disparity grew between 2002 and 2009 as the median NPE damage award rose to $12.9 million while the median award for practicing entities fell to $3.9 million (PwC 2010 study)
  • This statistic could be attributed to the definition of NPEs

• Many people define patent trolls simply as entities that hold patents with no intent of commercializing the invention. This is incredibly broad, and includes universities, individual inventors, think tanks etc.

PWC 2014 Patent Litigation Study

(Link to study)

• In 2014, the annual number of patent actions filed declined for the first time since 2009. Approximately 5700 cases were filed in 2014 - representing a drop of 13%

• In contrast, the number of patents granted by the USPTO continued to grow steadily, increasing by 14% over 2014. There continues to be a very high correlation (approximately 95%) between the number of patent cases filed and patent granted.