by Guro Ekrann, Marshall Watkins
American Enterprise Institute
October 23, 2013
The impact of patent assertion entities (PAEs) on innovation and growth in the US economy is a topic of spirited debate. Far less controversial is their impact on the extent and nature of patent litigation. According to the Congressional Research Service, PAEs, often referred to as “patent trolls,” filed 62 percent of all patent suits in 2012. Despite losing 92 percent of cases that reach merit judgments, PAEs’ ability to force settlements from smaller firms cost defendants and licensees $29 billion in 2011. That total marks a 400 percent increase over the $7 billion incurred in 2005. While the precise extent of the problem can be debated, there is near-universal agreement that abusive patent litigation is imposing real costs on the US economy. Given the broad agreement on the need to reduce unwarranted patent litigation, Congress is considering several major proposals. This analysis summarizes their main provisions.