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