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  • Writer's pictureRobert Spicer

Intellectual property law and money: patent trolls

This area of law is a notable exception to the general rule that money is normally a footnote in law books. The absence of any discussion, in student and practitioner textbooks, of the cost implications of legal rules, is a vacuum which effectively hides the reality that the poor cannot generally enforce their rights.

The economic effects of intellectual property regimes flow from the enormous expense of intellectual property litigation.

The expense of patent litigation, for example, is such that it has given rise to patent “trolls”. These are companies which collect patents, often of uncertain value, for the purpose of extracting royalties through threats of legal proceedings that it is cheaper to settle than to fight. Such companies often have no intention of manufacturing or marketing the patented invention. Patent trolls may, for example, buy a large number of patents from bankrupt companies and then complain of infringement. The cost of defending infringement actions in the United States is estimated at $1 million before trial. Defendant companies may settle such claims for hundreds of thousands of dollars even where they are frivolous. The expense of intellectual property litigation is a real burden on the ability of regimes to achieve their purposes.

This shows the effect of money on the practical application of a highly specialised area of law. This effect is, unusually, expressly recognised in intellectual property textbooks.

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