Patent Assertion and U.S. Innovation

Suits brought by [patent assertion entities, or “patent trolls”] have tripled in just the last two years, rising from 29 percent of all infringement suits to 62 percent of all infringement suits. Estimates suggest that PAEs may have threatened over 100,000 companies with patent infringement last year alone…
PAEs take advantage of uncertainty about the scope or validity of patent claims, especially in softwarerelated patents because of the relative novelty of the technology and because it has been difficult to separate the “function” of the software (e.g. to produce a medical image) from the “means” by which that function is accomplished…
One study found that during the years they were being sued for patent infringement by a PAE, health information technology companies ceased all innovation in that technology, causing sales to fall by one-third compared to the same firm’s sales of similar products not subject to the PAEowned patent.
Another study found that the financial reward received by winning PAEs amounted to less than 10% of the share value lost by defendant firms, suggesting that the suits result in considerable lost value to society from forgone technology transfer and commercialization of patented technology.

Executive Office of the President

Council of Economic Advisers, National Economic Council and Office of Science and Technology Policy

June 2013

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