Patent News

Nov. 9, 2014

Intellectual Asset Management: Bessen and Meurer change their minds about “trolls” and render their previous, flawed work completely meaningless, by Joff Wild

This article appeared in Intellectual Asset Management on November 9, 2014.

Compare and contrast two statements. Let’s start here:

NPEs are individuals and firms who own patents but do not directly use their patented technology to produce goods or services, instead they assert them against companies that do produce goods and services.

Now let’s move to this one:

Trolls are firms with no interest in innovation or technology transfer; they hold patents to assert them against innocent businesses to extract some of the profit from genuine innovators.

Very different, aren’t they? Yet, both were made by James Bessen and Michael Meurer. The first is contained in their highly influential and deeply flawed paper The Direct Costs from NPE Disputes, in which they claimed that litigation launched by NPEs (that they state are popularly known as “patent trolls”) cost operating companies $29 billion in 2011. The second comes from an article the pair wrote for the Boston Globe, which was published on 5th November.

Do you see what Bessen and Meurer have done? They have completely changed their definition of what a patent troll is. And why have they chosen to do so, do you think? Is it because under the first definition they use the organisation they work for – Boston University – would fit the description perfectly, while under the second it would not?

Well, I could not possibly comment; but it would be helpful if they could let us know. Because having always equated NPEs with trolls and having totally redefined what a “troll” is, all their previous work – flawed or not – on the costs “trolls” impose on businesses, the taxes they levy on innovation and the subsequent harm they do to the US economy generally is now rendered completely meaningless. The original definition was at least an attempt to provide some kind of objective parameter; the new one is nothing but a series of subjective judgements that fail to inform us who gets to decide which firms have no interest in innovation or tech transfer, what constitutes an innocent business and who are genuine innovators.

Actually, Bessen, at least, seems to have had a profound change of heart on patent trolls in the space of just a few months. Back in August he had an exchange on Twitter with IAM in which we actually ended up agreeing with each other. We asked:

@JamesBessen What do you define as a troll? That would be helpful to know. For us it’s about the quality of the patents, not the biz model.

He responded:

@IAM_magazine I agree. The problem is abuse of bad patents (“trolling”) which is done by operating co.s as well as NPEs

Does all this matter? You bet your bottom dollar it does. As noted above, the $29 billion figure is frequently cited in the debate about, and is a favourite of those campaigning for, patent litigation reform. The same applies to the claim, made in the equally flawed 2011 Bessen and Meurer paper the Private and Social Costs of Patent Trolls co-authored with Jennifer Laurissa Ford, that NPE suits “are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010”; and that “[d]uring the last four years, the lost wealth has averaged over $80 billion per year”. When such big numbers are used to justify profound change, they have to be watertight. The Bessen and Meurer ones are clearly far from that.