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New study suggests patent trolls really are killing startups

mpicpp (3454017) writes | about a month and a half ago

1

mpicpp (3454017) writes "Heavy patent litigation scared off about $22 billion in VC funding over 5 years.

Patent reform advocates have long argued that "patent trolls"—companies that do nothing but sue over patents—are harmful to innovation, not just a plague on big companies. A new study attempted to find out if there's any real data behind that accusation or if it's just a few sad anecdotes.

Turns out there is a very real, and very negative, correlation between patent troll lawsuits and the venture capital funding that startups rely on. A just-released study [PDF] by Catherine Tucker, a professor of marketing at MIT's Sloan School of Business, finds that over the last five years, VC investment "would have likely been $21.772 billion higher... but for litigation brought by frequent litigators."

The study defines "frequent litigators" as companies that file 20 or more patent lawsuits, which limits the definition to true-blue "patent trolls," or Patent Assertion Entities (PAEs), the term used by the paper. The study covers the period from 1995 to 2012.

Tucker's paper estimates a 95 percent confidence interval for the amount of lost investment to be between $8.1 billion and $41.8 billion. Those numbers are relative to a baseline of just under $131 billion of investment that actually occurred during that five-year period time."

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1 comment

Impact on entrepreneurs (1)

warm_warmer (3029441) | about a month and a half ago | (#47221161)

I wonder how many entrepreneurs hesitate or outright fail to start out of fear of being sued by a patent troll.

It's personally been discouraging - has anyone else felt the same way, or am I an outlier?
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