How Patent Trolls Destroy Innovation

walterbyrd sends this story from Vox: Everyone agrees that there's been an explosion of patent litigation in recent years, and that lawsuits from non-practicing entities (NPEs) — known to critics as patent trolls — are a major factor. But there's a big debate about whether trolls are creating a drag on innovation — and if so, how big the problem is. A new study (PDF) by researchers at Harvard and the University of Texas provides some insight on this question. Drawing from data on litigation, R&D spending, and patent citations, the researchers find that firms that are forced to pay NPEs (either because they lost a lawsuit or settled out of court) dramatically reduce R&D spending: losing firms spent $211 million less on R&D, on average, than firms that won a lawsuit against a troll. "After losing to NPEs, firms significantly reduce R&D spending — both projects inside the firm and acquiring innovative R&D outside the firm," the authors write. "Our evidence suggests that it really is the NPE litigation event that causes this decrease in innovation."