Transaction Costs and Trolls: Strategic Behavior by Individual Inventors, Small Firms and Entreprene

Name

Transaction Costs and Trolls: Strategic Behavior by Individual Inventors, Small Firms and Entreprene

Cite

Illinois Public Law Research Paper No. 08-21

Year

2009

Bluebook cite

Ball, Gwendolyn G. and Kesan, Jay P.,Transaction Costs and Trolls: Strategic Behavior by Individual Inventors, Small Firms and Entrepreneurs in Patent Litigation(February 1, 2009). U Illinois Law & Economics Research Paper No. LE09-005; Illinois Public Law Research Paper No. 08-21. Available at SSRN: http://ssrn.com/abstract=1337166

Author

Ball, Gwendolyn G. & Kesan, Jay P.

URL

http://ssrn.com/abstract=1337166

Item Type

article

Summary

The role of individual inventors, small firms and entrepreneurs in the patent courts has become controversial for two, somewhat contradictory reasons. First, there is the view that small parties may be at a serious disadvantage in the courts since they do not have the financial resources to overcome the transactions costs of litigation. However, there is also a fear that some small inventors and licensing firms may be operating as trolls, using the courts as a mechanism to extract economic rents from large companies.

Using original court documents to accurately identify the parties, outcomes and disputed patents in cases filed in 2000 and 2002, we explore how the resolution of patent cases relates to the nature of the parties. In particular, we examine whether individual inventors and entrepreneurs are ability to defend their patent rights and whether patent trolls are a significant problem . . .

Finally, we explore the role of licensing firms, the most common candidate for the troll moniker. We find that the licensing firms in our cohort of cases - all of which would have classified as small firms as of 2002 - are a very small percentage of all plaintiffs. However, when licensing firms sue large firms, they do not have the same propensity to seek a judgment or go to trial as witnessed for other small firms suing large firms. Thus, our results suggest that patent litigation is not dominated by trolls, but the best candidates for the troll moniker do seem to behave differently in comparison with firms of similar size. However, these results should be evaluated with caution; it may also be that the small numbers of such firms makes it difficult to analyze their behavior.

Excerpts and Summaries

Created

Wednesday 01 of July, 2009 20:16:52 GMT
by Unknown

LastModif

Wednesday 01 of July, 2009 20:16:52 GMT
by Unknown