The term patent troll was used at least once in 1993, albeit with a slightly different meaning, to describe countries that file aggressive patent lawsuits. If you own a patent, but you do not use the patented invention in a product or service, you are still entitled to enforce your patent. Patent trolls and wisconsins new antipatent troll law. An npe is defined as an entity that does not manufacture products itselfalso known as a patent troll. Sep 30, 2014 all too often, software patents stop more innovation than they promote. Other terms for patent trolls include nonpracticing entities npe and patent assertion entities pae. Is this true today or, given the unprecedented levels of npe litigation, do npes reduce innovation incentives. The npe troll litigation database is a move towards that and its free to accessuse. Patent troll, also called nonpracticing entity or nonproducing entity npe, pejorative term for a company, found most often in the american information technology industry, that uses a portfolio of patents not to produce products but solely to collect licensing fees or settlements on. Jan 24, 2012 patent trolls tend to chase after software applications which have broad applications in commercial markets where the payoff can be really big a few pennies each on a million units sold or a.
For example, weve worked with inventors who for whatever reason were not able to get funding to bring product to market yet whose inventions were being practiced by others without a license. But if that small inventor sells the patent to a patent troll, the npe can then sue ibm, and deliver a portion of those payments back to the inventor. What the attack means for providers as a growing market with plenty of vulnerable startups and difficulttodefine technology, the cloud space is an ideal target for patent trolls. Universities, independent inventors, and failed businesses are all examples of npes. Why one software ceo agreed to meet a patent trolland then. Trolls are litigation machines, the natural result of a patent system that has done a terrible job of evaluating and granting software patentsand a court system that hasnt done much better at. Mar 26, 2016 uniloc, perhaps best known as patent troll in chief, suffered a pretty devastating blow today. The private and social costs of patent trolls by james e. The patent system is flawed, some would say broken, and patent trolls or npes are to blame, no matter how good a case they might make for their role in the patent ecosystem. In relative terms, patent trolls are still a major problem. A patent troll acquires patents to make profits by bringing patent infringement lawsuits. The company has long asserted that its software activation patent thats beguiled everyone from. Npes of this type often concentrate on technology products, and rpx rational patent is perhaps the best example of this type.
Npe zones deter non practicing entities npes who assert bad patents aka patent trolls npe zones deter non practicing entities npes who assert bad patents aka patent trolls zones. Over 5,000 firms were named as defendants in patent troll. A narrower term is nonpractising entity npe, which denotes a subcategory of patent trolls whose only activity in a domain is patent trolling. Nonpracticing entities npes and patent assertion entities paes, also referred to as patent trolls, are causing heated discussions in the intellectual property space. Rather than be politically correct and refer to npes simply as nonpracticing entities, they cut through all the noise, define what a patent troll is, and go through a detailed and rigorous analysis of the private and social costs of. Patent troll is a common, arguably derogatory term for nonpracticing entities npes entities that assert patent rights without ever having practiced.
The most active patent trolls of 2016 industries targeted. On wednesdaythursday, for example, unified patents showed that patent litigation is dominated by patent trolls, at least when it comes to software patents dressed up as internet of things. The patent troll crisis is really a software patent crisis thats because trolls are filing an unprecedented number of expensive lawsuits. Trolls, also known as nonpracticing entities, typically do not produce products or services, but are in the business of litigation. The npe troll litigation database is a move towards that and its free. Software makers and stakeholders are worried about a spate of patent troll litigation emerging in the open source space because of the growing popularity of the system that makes programs openly available to use and develop. Patents are legal instruments that can be used to sue people and companies for creating, selling, or using software. A patent troll is one type of nonpracticing entity. Npe lawsuits represent upwards of 17% of all patent lawsuits and 41% of all software patent cases, according to a 2009 study published in.
What is a patent troll and why should insurers of software. For lawyers who represent businesses in wisconsin, the law is an important tool to understand. There are a lot of analogies here and we believe its important to stand up for what is right and against this new breed of patent troll. Patent kinetics has worked with a number of patent owners who are not clearly either trolls or operating companies. They lie in wait for someone to create a process or product that has some relationship to the. We find that npe lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990. Stanfords npe litigation database makes a nice addition. Matteo, i get your distinction between trolls npes that raise bogus claims and other npes, which you give the label patent licensing and monetizing company plmc which. Freeny the freenys have filed more than 50 patent infringement cases, all in the eastern district of texas, against a variety of technology companies who utilize the power and convenience of cloudbased. However, we have witnessed some relatively surprising trends beyond just patent troll litigation, namely, an increase in competitorbased lawsuits as well as more focus and assertion against open source software by patent trolls and operating companies alike. They are commonly described as entities whose core business model is using ip to collect licensing fees instead of producing actual products.
Blue spike claims not to be a troll, but any legitimate business it has pales in comparison to its. Software and internet based companies billions in litigation costs and untold amounts in unreported licensing fees since the mid2000s, u. Dont blame the trolls for the patent problem wired. November 2011 by james bessen, jennifer ford and michael j.
The 1994 educational video, the patents video also used the term, depicting a green troll guarding a bridge and demanding fees. Mar 31, 2018 however, the uncertainty surrounding upcoming changes in patent law, such as the pending oil states decision, may be in part responsible for these lower filing rates. We have a nearly ready file motion to dismiss and a clear admission on the record that undercut the npes infringement theory. Open source case prompts patent troll litigation fears. Sep 21, 2011 patent trolls cost inventors half a trillion dollars. The private and social costs of patent trolls version. Cloud printing companies in a jam, face battle with patent. So before i imagine myriad layoffs for manufacturers and other physical operations staff, the truth is. One potential benefit of delaying is that another company may step in and take the lead on invalidating the patent asserted by the npe. Blackberry may have a brighter future as patent troll than. Jan 08, 2019 other related concepts include patent holding company phc, patent assertion entity pae, and nonpracticing entity npe, which may or may not be considered a patent troll depending on the position they are taking and the perception of that position by the public. The process starts when a shell company known as nonpracticing or nonperforming entity. Very often, the entities wielding software patents are patent trollscompanies that make money off suing and threatening to sue others. We helped initiate a law suit against a number of parties that was resolved to our client.
Using overbroad patents based on dated technology, trolls threaten litigation and bring infringement suits against inventors. This article provides a basic overview of wisconsins new anti patent troll law. When an npes own admission renders the infringement theory frivolous, its clear that the npe is a patent troll. Using stock market event studies around patent lawsuit filings, we find that npe lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010, mostly from technology companies. Companies which do not rely on massive software patent portfolios in the software patent wars do not see any difference in the threat of patent rolls and the threat of competing companies that make a product. This paper develops a model of patent trolls to understand various litigation strategies employed by nonpracticing entities. Though this is a very small market, unified patents. In international law and business, patent trolling or patent hoarding is a categorical or pejorative term applied to a person or company that attempts to enforce patent rights against accused infringers far beyond the patents actual value or contribution to the prior art, often through hardball legal tactics. Strategies for energyindustry and other nascent npe targets wilson sonsini. A patent is a governmentissued license that gives an inventor exclusive rights to the manufacture, use or sale of his invention for a specified time period. Weve always advised our customers not to pay threatened ddos attackers ransom requests but, instead, to mount a real defense. Assault on patent trolls leaves npe model in peril by erin coe august 1, 2016 when alexander poltorak founded general patent corp. Stanfords npe litigation database makes a nice addition in.
Voicing both sides of the patent troll debate forbes. Standing up to a dangerous new breed of patent troll. You are known in the world of patents and patent enforcement. Patent trolls include companies that buy patents often from firms that go bankrupt and then launch lawsuits or just lawsuit threats. Last year saw the rise of patent trolls in medtech, and patent trolls will become an even bigger problem in 2014 and beyond. Assault on patent trolls leaves npe model in peril law360.
Jun 21, 2018 our empirical analysis shows that on average, npes behave as opportunistic patent trolls. The patent scam highlights the many challenges frivolous patent litigation poses for business owners and entrepreneurs, juxtaposing their stories of struggle against interviews with lawyers and patent trolls who are benefiting from these loopholes in our patent system. An npe is any patent holder that does not actively manufacture a product or provide services related to the patent. There are plenty of figures in this analysis and we have reproduced only one above under fair use. Patent trolls have no products to attack with patents so large software patent portfolios are worthless in defending against a patent troll. What is a patent troll and why should insurers of software and internet based companies care. Patent litigation caused by nonpracticing entities npes, better known as patent trolls, cost u. It has also greatly increased the number of patent suits filed against energysector defendants and has forced yet another industry to reckon with eluding the patent troll tax. James bessen, jennifer ford, and michael meurer of bu school of law have written a phenomenal paper titled the private and social costs of patent trolls.
Cloud computing patent litigation trends competitor. In the hands of patent trolls, software patents are a particularly dangerous tax on innovation. We show that when an npe faces multiple potential infringers who use related technologies, it can gain a credible threat to litigate even when it has no such credibility visavis any single potential infringer in isolation. The huge societal costs of npe software patent lawsuits. One definition of npe is an entity that does not have the capabilities to design, manufacture, or distribute products that have features covered by the patent. While not all npes are trolls, all patent trolls are npes many firms follow npe behavior as a proxy for estimating abusive patent activity. Future parts will describe some possible solutions. But the term patent troll can also mean a specific type of npe that buys patents from others merely to. Jun 27, 2012 patent litigation caused by nonpracticing entities npes, better known as patent trolls, cost u. In the past, nonpracticing entities npes firms that license patents without producing goods have facilitated technology markets and increased rents for small inventors. Global membership organization unified patents inc, dedicated to deterring nonpracticing entity npe activity, has launched its cybersecurity protection zone that seeks to deter unsubstantiated or invalid patent assertions within the evergrowing industry. The law is designed to deter socalled patent trolls from threatening businesses with meritless patent infringement suits that can cost big money to fight. Npe zones deter non practicing entities npes who assert bad patents aka patent trolls.
Patent troll, also called nonpracticing entity or nonproducing entity npe, pejorative term for a company, found most often in the american information technology industry, that uses a portfolio of patents not to produce products but solely to collect licensing fees or settlements on patent. Patent trolls amass large numbers of patents with the intention of launching patent infringement suits. I work for a nonpracticing entity, or npe for those familiar with the term, a firm that does not commercialize any product or service, but fosters innovation by monetizing intellectual property rights iprs through licensing and technology transfer. Though this is a very small market, unified patents is its bestknown player. The patent system is flawed, some would say broken.
We are keen on keeping abreast of the latest trends in the intellectual property ip industry and the needs of the ip professionals from all perspectives. Sure, anyone can sue anyone, but winning this intellectual property lawsuit against the gnome foundation, a. Patent trolls and npes or nonpracticing entities are a contentious group the the u. May 16, 2019 as the united states of america becomes less trolls and software patentsfriendly often conflated with plaintiff unfriendliness its important to have accurate data which documents the numbers and motivates better policy. As the united states of america becomes less trolls and software patentsfriendly often conflated with plaintiff unfriendliness its important to have accurate data which documents the numbers and motivates better policy. Patent trolls, more formally referred to as nonpracticing entities npes or patent assertion entities paes, are companies that make money on patentinfringement lawsuits. Patent trolls often do not manufacture products or supply services based upon the patents in. Patent trolls are a special problem only for companies that have amassed large, expensive software patent portfolios. Patent troll is a slang term used to describe a nonpracticing entity npe that holds numerous broadly worded software andor technology patents that targets primarily smalltomidsize companies in a new form of what some have referred to as legalized extortion.
Total number of defendants added in campaigns in 2016 ecommerce and software feb. I work for a nonpracticing entity, or npe for those familiar with the term, a firm that does not commercialize any product or service, but fosters innovation by monetizing intellectual property rights. Sep 10, 20 voicing both sides of the patent troll debate. The patent troll crisis is really a software patent crisis. Serial litigant blue spike wins septembers stupid patent of. Nov 28, 2012 part one of a threepart series on software patents.
A nonpracticing entity npe is someone who holds a patent for a product or process but has no intentions of developing it. He would like to see the life of a software patent reduced from 20. No, its not a new animated movie character but rather a real class of businesses and individuals who use todays patent laws and systems to aggressively acquire significant patents in software, computer and technology areas. Why spectrum reallocation wont avert the coming data crunch but technology might keep the wireless industry afloat. Or are they patent trolls who opportunistically litigate over software patents with unpredictable boundaries. To fight or to settle, that is the question patent troll, or nonpracticing entity npe, is a derogatory term used to label people or companies that exploit patents as a business strategy. And patent trolls less pejoratively known as nonpracticing entities npes are to blame, no matter how good a case they might make for their. Whatever the cause, the volume of npe related filings remains high as is seen in the figures below. The economic burden of todays patent lawsuits is, in fact, historically unprecedented. In the nineteenth century, they were called patent sharks and they went after farmers in large numbers, armed with patents on barbed wire and sliding gates.
Bb, the former smartphone and software technology developer run by ceo john chen, may have a brighter future as patent troll than as a. Uniloc, perhaps best known as patent troll in chief, suffered a pretty devastating blow today. Serial litigant blue spike wins septembers stupid patent. Cybersecurity protection to deter patent trolls the. Oct 27, 2015 why one software ceo agreed to meet a patent trolland then fought it to the end. It has sued a whos who of technology companies, ranging from giants to startups, adobe to zeitera. In the past, nonpracticing entities npes, popularly known as patent trolls, have helped small inventors profit from their inventions. Cloud computing patent litigation trends competitor cases. These expensive portfolios are meant to be weapons in the software patent wars which are used to attack the products of enemy companies.