Non-practicing Entities Research Articles

특허확보 및 활용 패턴 분석을 통한 비실시기업의 분류 : BM 구성요소 중심으로

특허확보 및 활용 패턴 분석을 통한 비실시기업의 분류 : BM 구성요소 중심으로

Learning from Past Mistakes The US Patent System and International Trade Agreements

To ensure that the TPP agreement works properly in practice with regard to patents and the governance of pharmaceuticals and semiconductors, strong mechanisms for enforcement and for rooting out system abuse are needed. To make this happen, regulators should learn from past mistakes of the U.S. patent system: the proliferation of non-practicing entities (NPEs), and strategic behavior that blocks or delays generic competition in the pharmaceutical industry. This Think Piece presents key findings of the author’s research on the complexity of the U.S. litigation and regulatory frameworks that have provided fertile ground for strategic behavior that can have negative effects on innovation, and may distort the expected gains from trade for innovation.

Patent Licensing, Technology Transfer, & Innovation

Traditional justifications for patents are all based on direct or indirect contribution to the creation of new products. Patents serve the social interest if they provide not just invention, but innovation the world would not otherwise have. Non-practicing entities (NPEs) as well as product-producing companies can sometimes provide such innovation, either directly, through working the patent or transfer of technology to others who do, or indirectly, when others copy the patented innovation. The available evidence suggests, however, that patent licensing demands and lawsuits from NPEs are normally not cases that involve any of these activities.Some scholars have argued that patents can be valuable even without technology transfer because the ability to exclude others from the market may drive commercialization that would not otherwise occur. We demonstrate that even if various commercialization theories can sometimes justify patent protection, they cannot justify most NPE lawsuits or licensing demands.

When a Stranger Calls: Standards Outsiders and Unencumbered Patents

An extensive literature exists regarding the patent disclosure and licensing commitments made by participants in standards-development organizations (SDOs), and how such commitments affect the assertion of standards-essential patents (SEPs). But this literature largely ignores the acquisition and assertion of SEPs by entities that do not participate in SDOs (Outsiders). SDO Outsiders, which are not themselves bound by the licensing and other requirements imposed by SDOs, have far greater freedom to employ a range of litigation tactics not available to SDO participants when they enforce SEPs against manufacturers of standardized products (Producers).This article describes the first study that has been conducted to collect and analyze data relating to SEP assertions by SDO Outsiders, a large number of which are so-called non-practicing entities (NPEs). Over a fifteen-year period, assertion of SEPs by non-practicing entities (NPEs) has been significant, representing 77% of the U.S. patent assertion events for seven major standards (GSM, USB, 802.11, Bluetooth, UMTS, H.264, LTE). More importantly, both SDO Outsiders and participants assert a combination of SEPs that are encumbered by SDO FRAND licensing commitments and that are unencumbered. Thus, while NPE Outsiders are responsible for numerous assertions of unencumbered SEPs, the greater threat of hold-up and rent extraction could arise from assertions of unencumbered SEPs by SDO Outsiders that are themselves Producers.

Patent Licensing, Technology Transfer, and Innovation

Traditional justifications for patents are based on direct or indirect contribution to product creation. Non-practicing entities (NPEs) might provide such innovation, either directly, through working the patent or transfer of technology to others who do, or indirectly, when others copy. Available evidence suggests, however, that ex post licensing demands from NPEs do not normally involve these activities. Some have argued that patents are valuable without01/technology transfer because the ability to exclude may drive commercialization that would not otherwise occur. We demonstrate that even if commercialization theories sometimes justify patent protection, they cannot justify most NPE lawsuits or licensing demands.

Software Patents as a Currency, Not Tax, On Innovation

Software innovation is transforming the US economy. Yet our understanding of how patents and patent transactions support this innovation is limited, in part because of a lack of public information about patent licenses and sales. Claims about the patent marketplace, for example, extolling the virtues of intermediaries like non-practicing entities, or questioning the social utility of ex post patent licenses, tend not to be grounded in empirical evidence. This article brings much-needed data to the policy debate by analyzing transactional data from several proprietary databases of patent licenses and transfers, and reporting several novel findings. First I find that, despite recent legal developments that have reduced the enforceability of software patents, the market for software patents is remarkably robust and actually grew, not declined, from 2012 to 2015. I speculate that the strength of this demand is driven by the defensive, not only offensive, value of software patents, the importance of software business models, and bargain shopping in the acquisition of patents. Second, I explore the extent to which software patent transfers support the transfer of technology as opposed to supporting just the transfer of liability, or freedom from suit, with mixed results. I find that the majority of material software licenses reported by public companies to the SEC from 2000-2015 (N=245), which are non- representative of licenses in general, to support true technology transfer. However, I also find evidence that in recent years, large numbers of software patents apparently been sold to avoid litigation or provide general operating freedom, rather than to access specific technologies. Software patents transferred between public companies between 2012 and 2015 were two to three times more likely to go from an older company to a younger company, and from a higher revenue to a lower revenue public company. This finding lends some support to the perception that software patents are a tax on innovation that younger, lower revenue companies must pay to older firms with higher revenue.

Empirical Evidence on the Behavior and Impact of Patent Trolls: A Survey

We survey the empirical literature on non-practicing entity (NPE) litigation behavior and its consequences. We document both aggregate trends and cross-sectional differences amongst various types of NPEs. Survey evidence illustrates a number of ways in which NPEs can potentially act opportunistically, and indicates at least some instances and consequences of observed NPE opportunism. Large-sample empirical work has recently begun corroborating and amplifying the findings from survey evidence. NPEs on average behave as "patent trolls." Indeed, NPEs hold and frequently litigate patents that are likely to be at least partially invalidated; moreover, NPEs, target cash irrespective of its relation to alleged infringement. Cash-targeting is neither the main driver of practicing entity (PE) intellectual property (IP) litigation, nor of non-IP litigation against publicly traded firms. The empirical evidence suggests, however, that not all NPEs exhibit trolling behavior -- the cash-targeting observed in the data is primarily the behavior of large patent aggregators, rather than small inventors. NPE patent trolling has a real negative impact on targeted firms, without any increase in innovation, technology transfer, or other counterbalancing benefits measured thus far.

Universities and Patent Demands.

Research universities have made enormous contributions to the field of medicine and the treatment of human disease. Alone or in collaboration with pharmaceutical companies, academic researchers have added to the store of knowledge that has led to numerous life science breakthroughs. A new chapter may be opening for academic researchers, however, that could lead to a darker tale. ‘The mouse that trolled: the long and tortuous history of a gene mutation patent that became an expensive impediment to Alzheimer's research, by Bubela et al., chronicles one such tale.’ The authors do an excellent job of bringing to life the twisting saga that engulfed numerous academic and non-profit Alzheimer's researchers over many years. The authors note that the story is an outlier, but sadly, that may not be the case. There are increasing signs that academic researchers and their institutions are being caught up in the rush for gold that is accompanying the proliferation of the non-practicing entity business model. As I have noted before, academic institutions have a dual role, as keepers of the academic flame and guardians of the public monies entrusted to them through state and federal research funding. The specter of taxpayer money being used, not to advance research and for the betterment of society, but as part of schemes to extract money from productive companies may not sit well with voters, and ultimately, with legislators. In that case, researchers and institutions themselves may have much to lose.

The Defensive Patent Playbook

After the dot-com bubble collapsed, non-practicing entities (“NPEs”) emerged on the patent playing field. Patent thickets and aggressive litigation by non-practicing entities turned the patent system on its head. As a result, companies developed an array of defensive options and strategies to counter the changing use of patents. However, the tactics needed to navigate the patent system evolved as the landscape shifted. The analysis below follows the chronological evolution of defensive strategies and sets forth a defensive patent playbook for practitioners in the patent field.The analysis below follows the chronological evolution of defensive strategies and sets forth a defensive patent playbook for practitioners in the patent field.This Note proceeds in four parts. Each Part reviews the development of the patent landscape as a necessary backdrop for an analysis of various defensive patent plays. The issues from each era cumulated to shape the current patent landscape. Part I evaluates early defensive methods used to navigate webs of overlapping patent rights. Part II describes the rise of NPEs, changes in substantive doctrines, and additional strategies introduced in the wake of the dot-com bubble. Part III discusses the current trend towards increased monetization, and assesses defensive options in the current landscape. Part IV explores defensive tactics that may become widely used in the future.

Buyers in the patent auction market: Opening the black box of patent acquisitions by non-practicing entities

In this paper we conduct an exploratory study on the activity of NPEs as buyers of patents in the auction marketplace. The analyses are based on a comprehensive dataset covering all patent auctions held by Ocean Tomo until the end of 2008, matched with information drawn from patent databases and the USPTO reassignment register. The results indicate that the probability that a traded patent is acquired by a NPE rather than a practicing entity increases in the presence of triadic family members and backward citations, while it decreases in the number of inventors and when the invention represents an extensive technological advance (proxied by the originality index). If we disaggregate the category of NPEs, we find that, with respect to manufacturing buyers, defensive aggregators purchase patents which have, on average, a narrower technological scope, a higher technical merit, a lower number of inventors and a longer residual life. Instead, the super-aggregator Intellectual Ventures (I.V.) assigns a higher value, with respect to practicing firms, to patents that are triadic, have a longer time to expiration, have a lower number of inventors and have a higher number of assignees. Patents purchased by both defensive aggregators and I.V. also report higher values of forward citations and residual life than patents acquired by other NPEs.

The Unitary Patent Package: One-Stop-Shop or Shopping Mall?

This paper discusses the Unitary Patent Package based on the 16th draft of the Rules of Procedure of the Unified Patent Court. It starts with giving an overview of the current situation of patent litigation in Europe, the need for the unitary patent, the risks and advantages with emphasis on forum shopping and threat of abuse by non-practicing entities (NPEs). It discusses the structure of the UPC and its courts and panels, the available options for forum shopping under the UPC with emphasis on bifurcation of the court proceedings, fee shifting and the potential role that the Court of Appeal can play in rapidly harmonising court practices. Training of panel judges, multinational panel compositions and the highest quality of appeal judges are crucial to the proper functioning and curbing of forum shopping.

Comment of the Global Antitrust Institute, George Mason University School of Law, on the National Development and Reform Commission's Questionnaire on Intellectual Property Misuse Antitrust Guidelines

This comment is submitted to China's National Development and Reform Commission (NDRC) by the Global Antitrust Institute (GAI) at George Mason University School of Law in response to the NDRC's Questionnaire on Intellectual Property Misuse Antitrust Guidelines. The GAI Competition Advocacy Program provides a wide-range of recommendations to facilitate adoption of economically sound competition policy, including how to analyze conduct involving standard-essential patents and non-practicing entities.

Do Economic Downturns Dampen Patent Litigation?

Recent studies estimate that the economic impact of U.S. patent litigation may be as large as $80 billion per year and that the overall rate of U.S. patent litigation has been growing rapidly over the past 20 years. And yet, the relationship of the macroeconomy to patent litigation rates has never been studied in any rigorous fashion. This lacuna is notable given that there are two opposing theories among lawyers regarding the effect of economic downturns on patent litigation. One camp argues for a substitution theory, holding that patent litigation should increase in a downturn because potential plaintiffs have a greater incentive to exploit patent assets relative to other investments. The other camp posits a capital constraint theory that holds that the decrease in cash flow and available capital disincentivizes litigation. Analyzing quarterly patent infringement suit filing data from 1971–2009 using a time‐series vector autoregression (VAR) model, we show that economic downturns have significantly affected patent litigation rates. (To aid other researchers in testing and extending our analyses, we have made our entire data set available online.) Importantly, we find that these effects have changed over time. In particular, patent litigation has become more dependent on credit availability in a downturn. We hypothesize that such changes resulted from an increase in use of contingent‐fee attorneys by patent plaintiffs and the rise of nonpracticing entities (NPEs), which, unlike most operating companies, generally fund their lawsuits directly from outside capital sources. Over roughly the last 20 years, we find that macroeconomic conditions have affected patent litigation in contrasting ways. Decreases in GDP (particularly economy‐wide investment) are correlated with significant increases in patent litigation and countercyclical economic trends. On the other hand, increases in T‐bill and real interest rates as well as increases in economy‐wide financial risk are generally correlated with significant decreases in patent suits, leading to procyclical trends. Thus, the specific nature of a downturn predicts whether patent litigation rates will tend to rise or fall.

Spreadsheets and the Violence of Forms: Tracking Organisational and Domestic Use

Spreadsheets and the Violence of Forms: Tracking Organisational and Domestic Use

Permanent Injunctions in Patent Litigation After eBay: An Empirical Study

The Supreme Court’s 2006 decision in eBay v. MercExchange is widely regarded as one of the most important patent law rulings of the past decade. Historically, patent holders who won on the merits in litigation nearly always obtained a permanent injunction against infringers. In eBay, the Court unanimously rejected this “general rule” that a prevailing patentee is entitled to an injunction, instead holding that lower courts must apply a four-factor test before granting such relief. Almost ten years later, however, significant questions remain regarding how this four-factor test is being applied, as there has there has been little rigorous empirical examination of eBay’s actual impact in patent litigation.This Article helps fill this gap in the literature by reporting the results of an original empirical study of contested permanent injunction decisions in district courts for a 7½ year period following eBay. It finds that eBay has effectively created a bifurcated regime for patent remedies, where operating companies who compete against an infringer still obtain permanent injunctions in the vast majority of cases that are successfully litigated to judgment. In contrast, non-practicing entities almost always are denied injunctive relief. These findings are robust even after controlling for the field of patented technology and the particular court that decided the injunction request. It also finds that permanent injunction rates vary significantly based on patented technology and forum. Finally, this Article considers some implications of these findings for both participants in the patent system and policy makers.

Studying the Impact of eBay on Injunctive Relief in Patent Cases

The Supreme Court’s 2006 decision on eBay Inc. vs MercExchange LLC (the eBay ruling) marked a turning point in the history of patent enforcement and policy. Almost a decade after the eBay ruling, there is still confusion about the implications and impact of this decision. Such questions still remain: Has the rate of injunctions been impacted, and if so, by how much? And, which types of parties are impacted - practicing or non-practicing entities? To our knowledge, there is not a systematic empirical study that explores whether the eBay ruling impacted practicing and non-practicing patent holders differentially, by examining an exhaustive set of rulings on both preliminary and permanent injunctions and comparing the rates pre-eBay and post-eBay. Employing a comprehensive dataset of patent cases from 2000-2012, we seek to address the following issues: (1) The difference in the rate at which both preliminary and permanent injunctions were granted for cases where an injunction was requested, including the rate at which these motions were filed pre- and post- eBay; (2) Whether the rate of injunctions granted was different based on patent ownership (practicing versus non-practicing entities). In addition, any outcome of patent cases must take into account the quality of the patents asserted. Therefore, while studying whether injunctions were granted or not, we control for proxies for patent quality based on the received citations and other metrics. We find that the U.S. Supreme Court decision in eBay v. MercExchange has had a significant impact on injunctive relief in patent cases. Contrary to earlier empirical studies involving small sample datasets, our extensive analysis with a dataset involving thousands of patent cases both pre- and post- eBay shows that the eBay decision has reduced, rather dramatically, both the level at which injunctive relief is sought in patent cases and the rate at which they are granted, particularly for preliminary injunctions. We also study the impact of the eBay decision on the quality of patents for which injunctive relief is ought and the nature of the patent plaintiff (operating company vs. non-operating company) and their relative success rates with obtaining injunctive relief. This study raises important policy questions about the current diminished role for injunctive relief in patent cases and also the relationship between injunctions and the type of patent-plaintiff entity and patent quality.

Effect of Non-Practicing Entities on Innovation Society and Policy: An Agent Based Model and Simulation

Effect of Non-practicing entities (NPE) on innovation society has been a controversial issue owing to their having both positive and negative impacts. However, measuring the net effect as well as finding ways to reduce the probable negative effects of the NPEs has been a challenge. In this paper, we propose an agent-based model of the patent market to address the issue. We conduct a simulation to test whether NPEs produce more harm than good. Further, a simulation evaluates the efficacy of possible legislative options to control NPEs’ undesirable effects, which are being discussed in the U.S congress. Our result concludes that the negative effects of NPEs are likely to outweigh their potential benefits. In addition, it provides a first look at the effectiveness of each policy in relieving the NPE’s negative effect. We provide a quantitative ground for policy makers to discuss policy options regarding the NPE issue and a guideline for implementation of such policies.

The Effect of Patent Length on Social Welfare: The Economics of Modifying Patent Life as a Policy Instrument

This paper will explore the contemporary applicability of an economic model of patents. It will proceed to then analyze the implications of the model’s findings on scholarly understanding of the contemporary patent system. The model views a patent as conferring a period of exclusivity during which the patentee can reap the producer surplus due to monopoly pricing. Upon expiration of the patent and thus the elimination of the deadweight loss characteristic of the patentee’s monopoly pricing during the term, the surplus becomes entirely the consumer’s. The model treats the problem as one of optimization, balancing the force of the patentee’s profit motive and desire to seek adequate recompense for its initial cash outlay to come up with the invention (i.e. a desire for a longer patent term), with the push of the government’s desire to reduce the deadweight loss and allow other market entrants (i.e. a shorter patent term). My updates to the model demonstrates that contemporary discount rates will not affect the basic findings that welfare is not too dependent on patent length. In addition, the findings still have policy-setting applicability in light of the existence of patent thickets. If the government were to aim to decrease thickets, then shortening patent life would be an effective tool, as overall societal welfare would be minimally impacted. The paper also demonstrates that shortening or tweaking patent life also has the ability to stem the effects of the activity of non-practicing entities (NPEs), commonly known as “patent trolls.”

스마트카 특허분쟁 네트워크분석을 통한 특허분쟁예방에 관한 연구

Smart Car market has been experiencing continuous growth to drive leading companies in automotive and IT industries to focus on advancing related technologies. As the IT technologies fuse into automotive technologies, the patent litigation has been showing changes. One of the prominent changes in patent litigation pattern of Smart Car field is the increased activities of the Non-Practicing Entities (NPEs), whose main field has been the IT area. However, the automotive companies have been mainly focusing on preventing patent disputes against competitors through trend analysis, which caused them to become relatively vulnerable to the attacks from NPEs. In this study, we developed a methodology for monitoring and analyzing the activities of NPEs using network analysis tools to suggest effective strategies for manufacturing companies to fortify their ability to respond against unanticipated attacks. Our methodology , which is developed for the Smart Car field, can also be useful for other fields such as IT and electronics.

The Mouse That Trolled: The Long and Tortuous History of a Gene Mutation Patent That Became an Expensive Impediment to Alzheimer's Research.

This case study presents the tale of the academic discovery of a rare mutation for early-onset Alzheimer's disease that was patented by a sole inventor and licensed to a non-practicing entity (NPE), the Alzheimer's Institute of America (AIA). Our aims are (1) to relate this story about patents, research tools, and impediments to medical progress, and (2) to inform ongoing debates about how patents affect research, disposition of university inventions, and the distribution of benefits from publicly funded research. We present an account of the hunt for Alzheimer's genes, their patenting, assignment, and enforcement based on literature, litigation records and judicial decisions. While AIA's litigation eventually failed, its suits against 18 defendants, including one university, one foundation, and three non-profit organizations were costly in court years, legal fees, and expert time. Reasons for the failure included non-disclosure of co-inventors, State laws on ownership and assignment of university inventions, and enablement. We discuss the policy implications of the litigation, questioning the value of patents in the research ecosystem and the role of NPEs (“patent trolls”) in biotechnological innovation. The case illustrates tactics that may be deployed against NPEs, including, avenues to invalidate patent claims, Authorization and Consent, legislative reforms specifically targeting NPEs, reforms in the America Invents Act, and judicial action and rules for judicial proceedings. In the highly competitive research environment of Alzheimer's genetics in the 1990s, patents played a minor, subordinate role in spurring innovation. The case produces a mixed message about the patent system. It illustrates many mistakes in how patents were obtained, administered, and enforced, but, eventually, the legal system rectified these mistakes, albeit slowly, laboriously, and at great cost.