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.

• Non-employer firms (defined as no paid employees, has annual business receipts of $1,000 or more) are three quarters of all businesses

[8]

• According to the US Census Bureau, the mean annual revenue of businesses with less than 20 employees is about 148,000 USD. (Used file titled "U.S. & states, NAICS sectors, small employment sizes" from [9])
  • Mean annual revenue of businesses with less than 500 employees is 403,000 USD.

[10]

[11]

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 patents granted.