They See Me Trollin'

Survey Says: Patent Troll Shenanigans Cost U.S. Companies $29B Annually

You get a lawsuit! And you get a lawsuit!
patenttrolls final david saracino Survey Says: Patent Troll Shenanigans Cost U.S. Companies $29B Annually

(Illustration by David Saracino / New York Observer.)

Patent trolls–or, as a new study drolly dubs them, “non-practicing entities”–have a business model that’s simple, elegant, and dastardly: Buy broad patents and start suing companies that could conceivably be infringing upon them. And the costs are adding up to a nice chunk of change: Two researchers estimate the costs at no fewer than $29 billion, reports Ars Technica.

Plus, that’s just direct costs for things like lawyer bills and licensing fees. A previous study by the same pair put indirect costs at the stratospheric tab of $83 billion.

As Ars points out, the sample size for this particular study was rather small, with just 82 respondents out of 250 surveyed. (Come on, doesn’t anyone want to bitch about patent trolls?) But those 82 companies had to deal with no fewer than 1,184 lawsuits, which comes out to something like 14 lawsuits per company per year. That sounds like a whole of billable hours to us.

But the lawsuits weren’t entirely evenly spread out: 59 percent of the suits were against small and medium-sized businesses with a median revenue around $10.8 million. That doesn’t leave much financial cushion for dealing with legalities.

However, it’s also worth mentioning that the data comes via RPX Corporation, which exists largely to provide a shield against trollery. The company acquires patents, then licenses them to members for an annual fee–meaning the group surveyed may very well be fighting off a greater number of suits.

The authors suggest a taxonomy of trolls:

“There are really two different worlds of trolls out there,” says Meurer. “There’s a talent in finding good patents, finding good targets, and matching the two. Just like the very best financiers go to Wall Street and get paid tons of money, I think the ‘big game hunter’ trolls also have a rare talent.”

Now, who does that sound like? Oh, right: ambulance chasers.

Follow Kelly Faircloth on Twitter or via RSS. kfaircloth@observer.com