Acquiring patents solely to extract licensing fees through litigation threats
Patent trolling refers to the practice of acquiring patents — often broad, vague, or of questionable validity — not to develop products or conduct research, but solely to extract licensing fees from companies through litigation or the threat of litigation. Patent trolls, formally known as "non-practicing entities" (NPEs), exploit the high cost of patent litigation to coerce settlements from companies that would rather pay than fight.
The economic impact is substantial. A Boston University study estimated that patent troll lawsuits cost the U.S. economy $29 billion annually in direct costs, with indirect costs potentially reaching $80 billion. Small businesses and startups are particularly vulnerable because they lack the legal resources to fight prolonged patent battles, making them more likely to settle.
Patent trolling represents a form of institutional capture — the patent system, designed to promote innovation by protecting inventors, has been weaponized by financial entities to extract rent from actual innovators. The practice demonstrates how legal frameworks intended to serve the public interest can be co-opted by sophisticated actors who understand how to exploit systemic weaknesses for private gain.
