US companies and society lost $ 500 billion due to patent trolls
All readers of the blog "Intellectual Property", probably aware of the existence of patent trolls. A typical troll is a small company that does not manufacture its own products, but has a number of patents. She is prosecuting larger companies that allegedly violate these patents.
Critics of the current patent system believe that patent trolls do not bring any economic benefits. Moreover, they cause direct damage to innovation and entrepreneurship. For example, three economists from the University of Boston published a study of all patent lawsuits against US public companies from 1990 to 2010 - and tried to assess the damage from them to the respondent companies themselves, as well as to society. The figure is amazing: half a trillion dollars.
The study authors used an unusual technique to calculate the “damage” from patent trolls. Obviously, this amount simply exceeds the amount of royalties and payments to intellectual property owners. Here you need to add indirect costs, such as the costs of litigation, the rejection of the development of new products or the cost of changing existing products and so on. How to account for all these indirect losses? Economists at Boston University decided to use market analysis.
The idea is that the value of shares of public companies on the stock exchange, in theory, takes into account all the losses that the company has suffered or will suffer in the future. The market must take into account all the available information, all the risks and future losses - for that he and the market. Accordingly, analyzing the change in the market price of shares in certain periods of time, one can estimate the damage the company suffered from the events that occurred in the market during this period.
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If within a few days after filing a claim from a patent troll, a company has lost 2% of market capitalization, then the market thinks that this is exactly the amount of company losses from this claim. Of course, this technique is controversial and not without flaws. For example, the value of shares of companies may vary, regardless of patent trolls, but simply on the general market movement. For each individual case, such a method cannot be applied at all, but on a large base of companies it should give a more or less accurate picture, because the extra “noise” (that is, extraneous movements of stock prices not related to patent lawsuits) are leveled on a large base.
The study authors used the Patent Freedom database , which includes 1,630 lawsuits filed by patent trolls over the past 20 years. Since several companies appear as defendants in many of the lawsuits, a total of 4114 claimant-respondent pairs were obtained.
The median average loss of market capitalization for the respondent for each pair was $ 20.4 million, and the arithmetic average was $ 122 million.
According to statistics, the situation is getting worse in recent years. Over the past four years, the damage from patent trolls has averaged $ 83 billion a year. According to researchers, this is more than a quarter of the research budget of all US industrial companies!
And this is not just a market loss in the competition, as advocates of patent laws themselves say. According to researchers from Boston University, part of this $ 500 billion falls on society. The calculation here is also simple and logical: if the claimant received income from his claim, for example, $ 10 billion, and the defendant’s capitalization - and the market value of his shares - fell by $ 100 billion, it turns out that $ 90 billion “disappeared” from the economy. disappeared from the pockets of shareholders, ordinary American citizens, from pension funds that had stocks in their portfolios. It turns out that the inventor received ten times less than the company lost. This is the fundamental flaw in the current patent system, which encourages patent trolls, not innovation.
Some more statistics. Software patents accounted for 62% of all patent troll lawsuits over the past 20 years. For comparison, only 2% of claims from this sample are related to pharmacological or chemical patents, 6% - patents for mechanical devices.
That is, the problem may not be so much in the entire patent system, but in software patents.
via Ars Technica
Critics of the current patent system believe that patent trolls do not bring any economic benefits. Moreover, they cause direct damage to innovation and entrepreneurship. For example, three economists from the University of Boston published a study of all patent lawsuits against US public companies from 1990 to 2010 - and tried to assess the damage from them to the respondent companies themselves, as well as to society. The figure is amazing: half a trillion dollars.
The study authors used an unusual technique to calculate the “damage” from patent trolls. Obviously, this amount simply exceeds the amount of royalties and payments to intellectual property owners. Here you need to add indirect costs, such as the costs of litigation, the rejection of the development of new products or the cost of changing existing products and so on. How to account for all these indirect losses? Economists at Boston University decided to use market analysis.
The idea is that the value of shares of public companies on the stock exchange, in theory, takes into account all the losses that the company has suffered or will suffer in the future. The market must take into account all the available information, all the risks and future losses - for that he and the market. Accordingly, analyzing the change in the market price of shares in certain periods of time, one can estimate the damage the company suffered from the events that occurred in the market during this period.
')
If within a few days after filing a claim from a patent troll, a company has lost 2% of market capitalization, then the market thinks that this is exactly the amount of company losses from this claim. Of course, this technique is controversial and not without flaws. For example, the value of shares of companies may vary, regardless of patent trolls, but simply on the general market movement. For each individual case, such a method cannot be applied at all, but on a large base of companies it should give a more or less accurate picture, because the extra “noise” (that is, extraneous movements of stock prices not related to patent lawsuits) are leveled on a large base.
The study authors used the Patent Freedom database , which includes 1,630 lawsuits filed by patent trolls over the past 20 years. Since several companies appear as defendants in many of the lawsuits, a total of 4114 claimant-respondent pairs were obtained.
The median average loss of market capitalization for the respondent for each pair was $ 20.4 million, and the arithmetic average was $ 122 million.
According to statistics, the situation is getting worse in recent years. Over the past four years, the damage from patent trolls has averaged $ 83 billion a year. According to researchers, this is more than a quarter of the research budget of all US industrial companies!
And this is not just a market loss in the competition, as advocates of patent laws themselves say. According to researchers from Boston University, part of this $ 500 billion falls on society. The calculation here is also simple and logical: if the claimant received income from his claim, for example, $ 10 billion, and the defendant’s capitalization - and the market value of his shares - fell by $ 100 billion, it turns out that $ 90 billion “disappeared” from the economy. disappeared from the pockets of shareholders, ordinary American citizens, from pension funds that had stocks in their portfolios. It turns out that the inventor received ten times less than the company lost. This is the fundamental flaw in the current patent system, which encourages patent trolls, not innovation.
Some more statistics. Software patents accounted for 62% of all patent troll lawsuits over the past 20 years. For comparison, only 2% of claims from this sample are related to pharmacological or chemical patents, 6% - patents for mechanical devices.
That is, the problem may not be so much in the entire patent system, but in software patents.
via Ars Technica
Source: https://habr.com/ru/post/129046/
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