Patent Trolls Research Articles

Escaping the patent trolls: The impact of non‐practicing entity litigation on firm innovation strategies

AbstractResearch SummaryNon‐practicing entities (NPEs) are firms that accumulate and acquire patents but do not further develop or implement the patented inventions (known as patent trolling). NPEs seek to receive royalties or profits through out‐of‐court settlements in patent infringement cases. We examine how firms targeted by NPEs in NPE‐initiated litigations (i.e., target firms) shift their innovation strategies and trajectories in response to heightened litigation risks. We theorize and show that after the initial lawsuit, target firms draw more upon their in‐house technologies to reduce the legal ground for further lawsuits. Furthermore, nontarget firms in related technology areas shift their innovation activities away from those of target firms under high NPE litigation risks. These effects are more pronounced with higher innovation costs and under more competitive product markets.Managerial SummaryNon‐practicing entities (NPEs) are known as patent trolls that accumulate and acquire patents but do not further develop or implement these patented inventions. These patent trolls aim to obtain royalties or profits through out‐of‐court settlements in patent infringement cases. We investigate how firms targeted by patent trolls in litigations (i.e., target firms) change their innovation strategies and trajectories to deal with increased NPE litigation risks. After the initial lawsuit, we find that these target firms use their in‐house technologies more to reduce the legal ground for future lawsuits. Moreover, nontarget firms in related technology areas move their innovation activities away from those of target firms under high litigation risks. These effects are stronger when innovation costs are higher and under more competitive product markets.

SOCIOLOGY AT A PROVINCIAL AGRARIAN UNIVERSITY (A CASE OF THE UDMURT STATE AGRARIAN UNIVERSITY)

This article is devoted to the activities of sociologists in a non-core university: the range of tasks usually performed, economic and contractual activities are analyzed, examples of completed contracts are given. Some of the contracts we have completed are related to sociological research conducted in the framework of court proceedings in the Federal Antimonopoly Service. The use of claims to elements of advertising and corporate identity, attempts at patent trolling as part of the fight against competitors, have become very common in the Russian Federation. Against this background, there is an endless field for the activities of sociologists. Such work requires field research experience and analytical skills, so it cannot be called simple. Each such case is unique and implies an individual approach to the problem. The article analyzes the general rules for the formation of technical specifications in the framework of contract preparation, some of its unacceptable and questionable elements, reputational risks.

Earnings Targets, Strategic Patent Sales, and Patent Trolls

Earnings Targets, Strategic Patent Sales, and Patent Trolls

Захист економічної конкуренції в сфері інтелектуальної власності: протидія патентному тролінгу

Захист економічної конкуренції в сфері інтелектуальної власності: протидія патентному тролінгу

Patent Trolls as Intruder in Intellectual Property Rights

Patent Trolls as Intruder in Intellectual Property Rights

Third-Party Patent Litigation Financing in the United States: Do You Know Who is Sitting in Your Courtroom?

The goal of this paper is to present the current landscape of third-party litigation financing in the United States—namely, patent disputes, as well as a brief insight into the litigation funding business. In the last ten years, patent litigation brought by patent trolls has increased, creating a significant problem. First, this paper explains the basic rules of federal civil procedure that relate to deciding which court will hear a patent case. Next, this paper discusses the Nimitz case before the United States District Court for the District of Delaware, which gained publicity due to the non-disclosure of certain facts by Nimitz’s counsel to the court. Finally, the author recognizes problems raised after the Nimitz case in connection to third-party litigation financing.

Patent trolls and capital structure decisions in high-tech firms

Under the growing threat of patent trolls, high-tech firms face substantial legal fees, increased cash flow volatility, and greater expected costs of distress. I show that the exposure to patent litigation leads to overly conservative capital structures in high-tech firms. My identification exploits a 2017 U.S. Supreme Court decision limiting the ability of patent trolls to seek favorable venue outside the defendant's incorporating state. Following the decision, firms incorporated in states with strong anti-patent troll laws increased leverage. The effects are driven by high-tech firms, the premier targets of patent trolls. Decreased cash flow volatility, especially in treated firms closer to financial distress, provides a key economic channel for my results.

Noticing Patents

Patents take the form of public letters that the U.S. Patent and Trademark Office (USPTO) actively disseminates. Whether these documents sufficiently provide the public with notice of the technologies they describe, as well as the proprietary rights that they assert, has been subject to long-standing debate. Many commentators conclude that patents are often filed too early in the research and development cycle, are deliberately drafted in a vague or obtuse manner, or are simply too numerous. As a result, identifying the relevant patent landscape is not just difficult for technology implementers, but possibly undesirable as a matter of innovation policy. Yet prior scholarship has seldom acknowledged current statutory mechanisms to improve the notice function of patents after they issue. This Article endeavors to fill that gap.
 Congress has long encouraged intellectual property rights holders to identify their patents on the products they sell. Patent marking has traditionally occurred on physical products or their packaging, although it has been recently extended to Internet-based virtual marking. The marking statute stipulates that patent proprietors that fail to mark face severe remedial restrictions when challenging infringers. Congress has assigned the Food & Drug Administration (FDA) a part in providing patent notice as well. In keeping with federal legislation, the agency maintains two publications, commonly known as the Orange and Purple Books, that act as a patent clearinghouse for approved drugs and licensed biologics.
 The role of a patent within the marketplace provides perhaps the most valuable form of notice that that instrument may offer. Yet the marking statute and FDA publications suffer from some apparent flaws. In combination they project a failure to identify all patents that are relevant to the product, favor patent trolls, involve dubious practical workings, promote misleading advertising, and impose punitive sanctions in comparison to the notice requirements of peer intellectual property rights. For its part, the FDA has proven an untutored and unreliable patent publicist for the past four decades.
 This Article offers specific suggestions to improve the notice functions of patents after they issue. It calls for the USPTO to develop and populate its own virtual marking database that correlates individual patents with the marketplace. It also encourages the FDA to take further steps to counter abuses of the Orange and Purple Books and to accelerate their patent notice functions. Finally, this Article takes broader lessons from this effort, offering pathways for policymakers to look beyond the patent instrument as they endeavor to improve the patent system’s notice functions.

Patent Trolls and the Market for Acquisitions

AbstractI study the effect of patent-infringement claims by patent trolls on acquisitions of small firms. Exploiting staggered adoption of state anti-patent troll laws, I find that the laws have two effects. First, the number of acquisitions of small firms declines after these laws are adopted. Second, the anti-troll laws increase the acquisition price for acquirers. The market reflects the increased cost of acquisition as measured by lower acquisition announcement returns. Large firms increase R&D after the adoption of state laws, replacing external innovation. Using a sample of acquisitions that are plausibly unaffected by the laws, I disentangle alternative explanations.

Media coverage and patent trolls: A study on US high-tech firms

This paper investigates the impact of media coverage on a nonpracticing entity (NPE) patent litigation concerning the defendant firms. Using a sample of high-tech and patent-intensive firms from the US market between 2000 and 2020, we find that NPEs tend to target highly visible firms. This result is more pronounced when the firms are large and experience positive sentiment in the market. We ensure the causality of this relationship using the anti-troll law, which is targeted to curb the threat of NPE trolls, as a natural experiment and distance from the nearest news branch as an instrumental variable. We find that after suing the target firms, the return of the plaintiff, or the NPE firm, increases. Our results provide new insight into the effect of media coverage on firms’ litigation environment.

UNFAIR COMPETITION IN PATENT LAW (PATENT TROLLING)

The purpose of this article is to consider problematic issues regarding unfair competition in patent law, in particular, patent trolling. For this purpose, the concepts of «patent trolling» and «patent troll» were analyzed. Types of patent trolls are also defined. The signs and peculiarities of patent trolling in Ukraine and the reasons for its spread are established. The manifestation of unfair competition, consisting in the abuse of intellectual property rights, is considered. Recommendations are given on introducing an effective mechanism to combat patent trolls and bring them to justice for unfair competition. The methodological basis of the research is general scientific and special methods of scientific knowledge. The use of these methods made it possible to describe and propose ways to solve the problem of unfair competition in patent law, in particular, patent trolling. Results: no provision in national legislation directly provides for the liability of patent trolls for abuse of rights, including under competition law. Ukrainian legislation does not provide for the liability of patent trolls for the abuse of rights, which in a certain way have a conditional nature, since they are provided under their personal responsibility in terms of compliance of the object with the conditions of patentability or the criteria of protectionability. In this regard, it is necessary to eliminate the causes and conditions that contribute to the mentioned negative phenomenon at the legislative level. Discussion: in fact, «patent trolls» are neither product manufacturers nor inventors, but only possess property rights to objects of intellectual property rights, buying up protective documents for them and realizing these rights only by prohibiting their use, initiating lawsuits, in fact, that’s why they got that name.

Intellectual property reform in the laboratory

This study experimentally captures the effects of reforming intellectual property (IP) and measures whether abolishing IP after a vote can reduce the creativity of the most talented innovators. The subjects start in a baseline setting with IP and then move to a second unannounced phase in which IP has or has not been abolished. First, we manipulate exogenously the presence or absence of the possibility to vote for or against IP. Second, we manipulate the information given to the subjects after the first phase. In the information treatment, we inform the subjects right before the vote that a previous experiment that used the same design (Brüggemann et al., 2016) showed that the no IP regime significantly increased players’ gains. Contrary to preregistered expectations, the results show that undergoing a vote does not reduce overall creativity. Actually, the most talented innovators do not vote in favor of IP. Rather, the subjects who vote in favor of IP are those who benefit relatively more from royalties. Surprisingly, no correlation is found between these two populations: the IP in our experiment seems to not reward the best players, but the players who choose an ‘IP-driven’ strategy of focusing on more extensible words while simultaneously relying on their own creations forego cross-fertilization with other players. These are relatively low-skilled players who choose a rent-seeking strategy that maximizes gains from the IP system itself. There are plausible arguments that this result is at least partly valid in the real world, especially for complex and highly sequential innovations where it has been proven that patent trolls and anti-competitive strategies are important.

Chilling effects of patent trolls

We find that non-practicing entities (NPEs) exhibit a unique legal strategy of sequential rounds: (1) subject to the same patent, NPE plaintiffs file approximately seven follow-on lawsuits after the initial lawsuit; and (2) when a firm is sued by NPEs, the likelihood of its technology peers being sued increases by 14 % in the subsequent year. Defendants' technology peers experience significant market value losses around the lawsuit filing date. Moreover, defendants' technology peers respond to NPE litigation risk by increasing R&D investments to develop workaround technologies. However, the increase in R&D incrementally generates fewer patent citations or patents with lower values. Thus, our results highlight broader wealth effects and corresponding real effects of NPE-initiated litigation on defendants' technology peers. These results provide sharp contrasts to the insignificant wealth and real impacts on defendants' technology peers if litigations are initiated by practicing entities (PEs). The new evidence informs the current regulatory and policy debates pertaining to NPEs.

Research Articles - Invention Patents Equilibrium; Research Integration, Spatiotemporal Development Strategy, and Circular Economy

Scientific researchers usually announce their achievements in conferences, magazines, and patent offices. Our study was initiated to improve the ascending ratio of research article publishing versus invention patent filing. World development relies, amongst others, upon two innovation indicators, the volume of Patent applications and the number of Scientific journal articles. To avoid data inconsistencies for our research, we created a new dataset with e corresponding data from different sources like WIPO, OECD, EU, EPO, and SCIMAGO. All primary external data after our calculations created an externally published dataset. After annual and country data analysis, we found irregularities in specific areas like University commercialization, country-specific drawbacks, possible patent troll pursuit, and unexplained gratification for investments through patenting. These results need further clarification at regional patent offices. Our main target was to raise the applied research country impact through patentability. To achieve it, we propose several specific actions. The homogenization of paper/patent worlds under LATEX; the evolvement of the ”claims” patent document into a lawful Artificial Intelligence supplement; and a Patent Stock Exchange as a Circular Economy sustainable asset. Finally, after wandering around the fascinating world of articles and patents, we came to the political correctness of research publishing. We extend the scientist’s effort in three steps. First, the initial research is published in a Research Magazine. Simultaneously or after a maturity stage, a WIPO patent application must be filed. Finally, as the third step, an ”after-Patent” more mature research again in a research magazine.

Escaping the Patent Trolls: Impact of Non-Practicing Entity Litigation on Firm Innovation Strategies

Escaping the Patent Trolls: Impact of Non-Practicing Entity Litigation on Firm Innovation Strategies

How do patent trolls affect the technological innovation of Chinese enterprises? Evidence from enterprise patent survey data in China

Based on the 2017 China Patent Survey data, this study examines how contact with patent trolls affects Chinese enterprises’ technological innovation. The results indicate that the presence of patent trolls in the market may be beneficial for stimulating Chinese enterprises’ awareness of intellectual property rights and improving their technological innovation, indicated by increased R&D investment and patent quantity. However, direct contact with patent trolls does not improve patent value. Such contact further negatively affects patent implementation, as demonstrated by a decreasing share of self-implemented patents and an increasing share of licensed patents. Our findings reveal a “patent troll infection” among enterprises, which hinders patented technology implementation.

Innovations of the legal protection of industrial designs

The article is dedicated to current issues of legal protection of industrial designs. There were analyzed the innovations concerning the legal regime of the industrial design introduced by the reform of the patent legislation (2020).
 It is substantiated that the reform of patent legislation, which took place in 2020, has significantly changed the level of legal protection of industrial designs, bringing it closer to EU standards. It is proved that the introduction of two types of legal protection of industrial designs is justified: short-term for unregistered, long-term for registered. It is established that the scope of legal protection provided for a registered industrial design is determined by the image of the industrial design entered in the state register of industrial designs, and not by a list of its essential features. It is established that the degree of freedom of the author is taken into account to determine the scope of legal protection of an industrial design. Differences in the exercise of rights to registered and unregistered industrial designs are identified. It is substantiated that industrial design rights may be declared invalid in court or out of court. It is established that the out-of-court procedure for invalidation of industrial design rights consists in the submission by any person to the Appeals Chamber of NIPO a substantiated application for invalidation of industrial design rights in whole or in part on the basis of non-compliance with conditions of legal protection. The importance of the extrajudicial procedure for revoking an industrial design certificate in the framework of the post-grant opposition procedure, which is an effective mechanism for combating patent trolling (well-known designs are registered as industrial designs), has been proved. It is substantiated that the legislator did not pay attention to the peculiarities of the use of registered and unregistered industrial designs in the digital environment, the development of which is often ahead of the relevant legal regulation.

Protection of the results of scientific activity: ethical and legal aspects

Within the framework of this article, the authors make an attempt to analyze the ethical and legal foundations of regulating the issues of protecting the results of scientific activities, including those created by artificial intelligence systems. In the introduction, the authors analyze the general issues of regulating the protection of scientific results created through the use of the latest advances in technology. The article also draws attention to the experience of foreign states and supranational organizations in the field of patenting the results of scientific activities created by artificial intelligence systems, patent trolling as a vivid manifestation of the ethical and legal issues of protecting intellectual property rights, with particular emphasis on relevant judicial practice. In conclusion, the authors note the main trends in the development of legislation in the field under study, formulate recommendations to the domestic legislator based on the study of foreign experience in the legal regulation of artificial intelligence. This article will be useful for researchers, legal practitioners, graduate students, students and everyone who is interested in the problems of intellectual property rights in the context of using the latest technologies.

Patent Trolls and their Excesses: Blackbird Tech v. Cloudflare

Patent Trolls and their Excesses: Blackbird Tech v. Cloudflare

Effects of the Growth of Intangible Capital Value on Firms

This paper discusses the effects of the growth of intangible capital value on firms after a thorough synthesis of over 20 sources. It begins by noting how the increased importance and prevalence of intangible assets and intellectual property, such as patents, trademarks, and copyrights, in the world economy over the past few decades has influenced various business activities and corporate decisions. These impacts range from changes in the competitive landscape within sectors to how firms borrow and choose targets for acquisition. From these impacts, it is hypothesized that the burgeoning growth of intangible capital will affect firms’ ability to borrow, how and why they decide to merge or produce new products, and international trade deals. With these changes, it is imperative that there will be further policies enacted to cover intangible capital and intellectual property usage during international trade agreements due to their heightened importance, changes within anticompetitive and antitrust legislation that take intangible capital into greater account, and a furthering of new legislation that pushes back against anticompetitive intellectual property rights and patent trolls. Lastly, this paper concludes by highlighting the disparate influence of intangible capital on two unique industries: fashion and technology, along with suggestions on how to better protect intangible assets in the future.