Patent News

Feb. 23, 2015

Stanford Report: Patent trolls serve valuable role in innovation, Stanford expert says, by Clifton B. Parker

This post originally appeared in Stanford Report on February 23, 2015.

So-called patent trolls may actually benefit inventors and the innovation economy, according to a Stanford intellectual property expert.

Stephen Haber, a Stanford political science professor, suggests in new research that concerns about too much litigation involving patents is misguided.

A patent troll is a person or company that buys patents – without any intent to produce a product – and then enforces those patents against accused infringers in order to collect licensing fees. Some say the resulting litigation has driven up costs to innovators and consumers.

To the contrary, Haber said, his research with Stanford political science graduate student Seth Werfel shows that trolls – also known as patent assertion entities, or PAEs – play a useful intermediary role between individual inventors and large manufacturers.

Their study focused on why inventors choose to sell their patents to PAEs rather than license their technologies directly to manufacturers. The asymmetry in financial resources between the inventor (small) and the manufacturer (large) is a key motive for doing so.

“A primary reason why individual patent holders sell to patent assertion entities is that they offer insurance and liquidity,” wrote Haber, the A.A. and Jeanne Welch Milligan Professor in the School of Humanities and Sciences.

In an interview, Haber said, “If there’s something like patent trolls that exist that are supposedly bad, but you observe a lot of them, you have to ask yourself, what role do they play in making a market work?”