Profs. Cohen, Gurun, and Kominers first published a paper collecting evidence of the impacts of NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. on innovation in 2014. Recently, they updated the paper, incorporating additional evidence and research from the past four years. The key takeaways?
“NPENon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. litigation has a real negative impact on innovation at targeted firms: firms substantially reduce their innovative activity after settling with NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. (or losing to them in court)”
And
“we neither find any markers of significant NPENon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. pass-through to end innovators, nor of a positive impact of NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. on innovation in the industries in which they are most prevalent.”
In other words, patent trolling activities harm innovative activity conducted by the companies they target, while failing to promote innovation elsewhere in their industries.
NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. Are Opportunistic Litigants
One finding in the paper is that, controlling for other characteristics, NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. target defendants opportunistically—they look for defendants who either have a relatively high amount of cash or who have recently received positive cash shocks (e.g., a VC investment).
This seems reasonable—after all, why sue someone who can’t pay you anything? Except that it pairs with two other key findings in the paper. First, NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. target cash-rich companies with smaller legal teams. And second, both large operating companies and smaller inventors who file patent infringement lawsuits don’t exhibit the same behavior with respect to targeting firms with high cash reserves and small legal teams. In fact, this behavior is not observed in any other type of litigation—only in NPENon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. patent litigation.
In other words, NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. and operating companies behave in fundamentally different ways as plaintiffs, ways that suggest that NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. litigation strategies are not aimed at policing infringement but rather at targeting for financial return, regardless of the strength of the infringement case.[1. This aligns with the existing data showing that NPENon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. lawsuit success rates are significantly lower than the success rates of operating companies.]
When paired with the finding that NPENon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. litigation has a negative impact on innovation at the targeted firm, this means that NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. are more likely to target small innovators and particularly to target the small innovators who are most likely to succeed absent NPENon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. intervention, behavior not seen as part of operating company litigation.
NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. Don’t Contribute To Innovation
All of that might be acceptable if there was evidence that NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. provide innovators who can’t afford to pursue and monetize their inventions with a reward. But the evidence shows that there’s no positive impact on innovation from NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it., and it shows that there’s no reason to believe NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. provide significant reward to innovators. In fact, the paper estimates that firms who are successfully targeted by NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. (resulting in either a lawsuit loss, or a settlement) reduce their innovation investment by an average of 20%.[2. Firms that lose to an operating company do not exhibit the same impacts.]
The paper also describes the lack of any evidence for pass-through of financial returns to the actual innovator. The best available estimate cited in the paper is that only 5% of NPENon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. winnings is returned to innovators. And, comparing areas of technology where NPENon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. litigation is frequent to areas of technology where NPENon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. litigation is not frequent, there is no evidence for the proposition that NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. promote innovation—no enhanced innovation is seen in those areas of technology.
Keeping The Problem From Getting Worse
The evidence continues to make clear that NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. are a tax on ingenuity and economic activity. Reforms like IPRIntellectual Property Rights. Usually associated with formal legal rights such as patent, trademark, and copyright. Intellectual property is a broader term that encompasses knowledge, information, and data considered proprietary whether or not it is formally protected. and the Alice case have been effective in helping to reduce NPENon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. activity.
So why are there efforts—including from U.S. Patent and Trademark Office Director Iancu—to minimize the effectiveness of these reforms?
