Over the last five years, venture capital investment in startups would have likely been $22 billion higher were it not for patent infringement lawsuits lodged by “patent assertion entities,” according to a study by MIT professor Catherine Tucker.
The study considered PAEs, also known as “patent trolls,” that had filed at least 20 lawsuits between 1995 and 2012. The study found a positive correlation between some patent litigation and VC funding, but only up to a point.
“In the beginning, in general, patent litigation is good,” Tucker told tech news site Ars Technica. “It suggests a well-functioning patent system and has a positive effect. However, when you get to a certain point, that’s no longer the case. Then, the more patent litigation you have, the worse it is for venture capital investment.”
When the study considered only litigation from patent assertion entities, the effect was entirely negative – no amount of litigation activity by PAEs correlated with increased VC investment, Ars reported.