A Legal Blog by Aaron | Sanders, PLLC


Patent Trolls-A Primer (Part 2)

Why NPEs Are OMG!

Last time, I explained what patent “trolls”—more politely known as a non-practicing entities or “NPEs”—are and why their business model is such a good one. Mostly they benefit from asymmetrical warfare: a defendant must spend much more money, time and other resources than NPEs, to say nothing of potential liability. Also, the types of patents that NPEs like—broad patents in popular fields with early priority dates—are undervalued and easy to pick up on the cheap. All you need are some good patents and a law firm experienced in enforcing patents willing to take the case on a contingency, and what’s not to like?

Since my main goal is not to condemn (or, for that matter, praise) NPEs, but to explain how got to be where they are, I’m discussing ten patent rules and truisms that make NPEs lucrative. Last time, I discussed three of them: (1) you don’t need to practice the patent to enforce it; (2) you can buy and sell patents like property; and (3) once issued, patents are difficult to invalidate. This time, I’ll discuss the other seven and provide some thoughts about reform (assuming you think reform is a good idea).

Well-timed injunctions

It used…

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Patent Trolls: A Primer (Part 1)

It’s More Complex Than You Might Think

With several bills pending in Congress and executive action by the current presidential administration, with the accompanying rhetoric, you just might start to wonder about—or maybe have already formed an opinion on—“patent trolls.” The issue is actually fairly complex. While I think some reform is a good idea*, I’m eager (as always) that we not throw babies out with bathwater. So you can make up your own mind, what I thought I’d do is set out the patent laws and principles most important to the phenomena of the “patent troll.”

* Something more nuanced than either “patents suck; they always interfere with innovation” and “patents are awesome; they always lead to innovation.”

The term “patent troll” is a pejorative term that means slightly different things to different people. It could mean:

Simply any patentee (owner of a patent) that does not practice the invention disclosed in the patent, politely known as a non-practicing entity (“NPE”).
A patentee that doesn’t practice anything except enforcing the patents it owns, politely known as a “patent holding entity” (“PHE”) or, more positively, a “patent licensing entity.”
A patentee that not only doesn’t practice the disclosed invention, but enforces its patents…

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