Don’t Feed the Trolls?

John Johnson, NERA Economic Consulting Vice President, Washington, DC, Gregory K. Leonard, NERA Economic Consulting Vice President, San Francisco, CA, Christine Meyer, NERA Economic Consulting Vice President, White Plains, N, and Ken Serwin, LECG, LLC, Director, Emeryville, CA

3/25/2015
(Original Publish Date: 9/30/2007)

Many vociferous opponents to patent trolls claim that trolls are a drag on society. Patent trolls often are accused of using the patent system to extort unreasonable royalty payments from companies who benefit the economy by developing products that consumers want. The extortionary royalty payments, it is said, constitute a "tax" that ultimately leads to less product development and higher prices for consumers. This article from Les Nouvelles examines whether there is an economic case to be made against trolls and whether society would be better off without them. The authors explore a range of issues surrounding patent trolls, including defining what kind of patent owner qualifies as a troll; the effects of troll activity on innovation; whether -- in light of the recent Supreme Court opinion in MercExchange v. eBay -- trolls should be allowed to exclude from the market entities that produce goods that embody their patents; and whether restrictions, or a downright prohibition, on trolls would increase or decrease social welfare.