One of the factors missing from discussions of the cost of out patent system is hard data dollars and cents of what it costs society. Some of us have long known that it was a net loss, but that is hard to argue when you don't have the numbers. That has just changed, according to a book review by Timothy B. Lee link here. The book reviewed is Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk by James Bessen and Michael Meurer .

The hypothesis actually tested was, "Patents are supposed to create a positive incentive for innovation by enhancing the profits of companies that develop new technologies. If the patent system is working properly, the average firm's patent portfolio should generate more profits than the total cost of defending against patent infringement lawsuits from other firms. If, in contrast, litigation costs exceed patent profits, that suggests the patent system is actually creating a net dis-incentive to innovation. In that case, innovative companies would be better off with no patent system at all."

"Their data suggests three broad conclusions. First, patent litigation began rising sharply in the early 1990s. The costs of defending against patent litigation for non-chemical firms held steady at about $2 billion per year during the 1980s, but by 1999 (the last year for which they have reliable data), patent litigation was costing defendants more than $10 billion annually. Second, while the chemical and pharmaceutical industries also experienced increased litigation during the 1990s, the problem was much less dire; the patent system still appeared to offer positive innovation incentives for drug and chemical firms."

"Most shockingly, Bessen and Meurer's data suggest that outside of the chemical and pharmaceutical industries, litigation costs for the average public firm actually exceed profits from their patent portfolio by a wide margin. By 1999, the last year in their sample, defending against patent lawsuits cost non-chemical public firms about $12 billion, while their patent portfolios generated only about $3 billion in profits. This data suggests that outside the chemical and pharmaceutical industries, the patent system actually reduces the net returns to innovation; firms don't earn enough from their patents to offset the costs of defending themselves against patent infringement lawsuits brought by other firms."

There are some caveats to the study, so more work needs to be done. But with that proviso, not just the voter (consumer) needs to think about our busted patent system, but so does business and other patent owners. They should be banging the doors down on the Congress to get this changed.