Joff Wild

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.

In fact, not only is there real doubt about the quality of the research that the pair have carried out, but now there are also questions to be asked about their basic credibility as information sources. They surely cannot continue to insist that figures produced based on definitions they no longer hold to should be taken seriously. For those numbers to be justifiable today, even remotely, Bessen and Meurer would have to show that they revisited their previous work to ascertain whether it covered only “firms with no interest in innovation or technology transfer” that “hold patents to assert them against innocent businesses to extract some of the profit from genuine innovators”; as well as how they made their decisions about such entities, what constitutes an “innocent business” and what/who should be considered a “genuine innovator”. If they fail to do so, then they do not have a role to play in the patent reform debate, if that debate is to be one founded on empirical evidence and transparent research.

There are politicians and journalists out there who will continue to use the numbers Bessen and Meurer have produced because they do not know any different. They need to be educated. Others cannot use ignorance as an excuse. They know what is going on, if they choose to ignore it because it does not suit their agenda then they need to be held to account.

Patent reform is too serious an issue to be decided by spin, misinformation, unchallenged changes of definition and who spends the most lobbying dollars. Bad law could do profound damage to the US and its unrivalled capacity to turn invention into new, life-changing products and industries. And given the extraordinary global innovation leadership the US has shown since its founding fathers decided to entrench the patent system into the constitution when they ratified it in 1788, every single one of us has a stake in ensuring that does not happen.  

NOTE: Today’s blog was originally going to be about the substance of the Bessen and Meurer Boston Globe piece, its mischaracterisation of  sovereign patent funds as trolls and some demonstrably incorrect statements about the activities these funds have engaged in - all of which raise further questions about the two’s credibility. However, the first paragraph of the article got in the way. We will return to what gives every impression of being an unpleasant attempt to influence the reform debate by making a dog whistle about foreigners and their failure to “play by the rules” later this week.