Suits are easy and guaranteed to benefit large firms.

A patentee does not need to demonstrate infringement to extract a license from a startup. Rather, the patent owner needs only to raise a colorable claim of infringement. This is because any lawsuit has the potential to divert the startup's transaction costs to litigation defense, rather than research and development. These costs are significant, as patent trial costs average $1.6 million for cases with less than $25 million in dispute, and a mean of $3.5 million for the valuation of harm is higher.199 These costs are not symmetrical, as the cost to defend and attempt to invalidate a patent are far greater than those necessary to assert a patent.200 A rational startup would pay a licensing fee solely to avoid this massive financial drain, even if the asserted patent appears invalid on its face.201 With the largest share of transaction costs, the startup has an incentive to capitulate despite the fact that infringement of a valid patent had never been proven.