Noel Maurer and Stephen Haber ‘An Empirical Analysis of the Patent Troll Hypothesis: Evidence from Publicly-Traded Firms’ (2018) Hoover Institution Working Paper no. 17003

Do firms that earn revenues from licensing their patent portfolios, rather than producing physical products – often referred to as patent assertion entities (PAEs) or, more disparagingly as ‘patent trolls’ – frustrate or facilitate innovation? According to one view, PAEs purchase specious intellectual property and then file frivolous lawsuits in order to extort revenues from operating companies that would rather settle than go through the expense of litigation. The revenues earned by PAEs are therefore a tax on innovation: dollars that would be spent on R&D by operating companies are diverted to non-productive uses. A business model based on using low value patents to file frivolous lawsuits for their nuisance value, with little risk of being countersued, should yield easy returns—and a high yield, low risk business model that is not characterized by barriers to entry should proliferate rapidly. It follows, accordingly, that PAEs are a systemic threat to innovation, economic growth, and consumer welfare, and thus the laws governing…

Jose Contreras and Peter Georg Pycht ‘Patent Assertion Entities and Legal Exceptionalism in the EU and the US’ (2017) Max Planck Institute for Innovation and Competition Research Paper no 17-11

This paper – which can be found here – identifies similarities and differences between Europe and the US regarding the role that patent assertion entities play in patent policy and patent litigation; and seeks to determine whether the law applicable to PAEs is substantively different from the law governing patent litigation more generally. As explained in previous posts, Patent Assertion Entities (PAEs) are firms that are in the business of patent monetization: they acquire patents from a variety of sources and then seek to collect revenue from companies manufacturing and selling products covered by those patents. More pejoratively, PAEs are known as patent “trolls”. Many commentators and policy makers have described PAE litigation as a phenomenon distinct from ordinary patent litigation. A number of studies suggest that a significant portion of recent U.S. patent litigation is attributable to PAEs, and that PAE activity is significant in Europe as well. One recent study found that PAEs accounted for approximately 19% of…

Jorge L. Contreras, Fabian Gaessler, Christian Helmers, Brian J. Love ‘Litigation of Standards-Essential Patents in Europe: A Comparative Analysis’Berkeley Technology Law Journal (2018, forthcoming)

This paper – which can be seen here – provides a comparative empirical study of European patent litigation relating to standards essential patents (SEPs). The paper begins with a description of SEPs and, more interestingly for our purposes, of the contexts in which SEP litigation arises. The simpler type of litigation occurs when the holder of a SEP and its potential licensee disagree whether an offered royalty rate is, indeed, FRAND. However, some SEP holders’ transfer patents to non-practicing entities (NPEs), including patent assertion entities (PAEs), for a variety of financial and strategic reasons. This practice is sometimes referred to as “privateering”. There are already a number of well-known cases involving SEP assertions by PAEs and other NPEs.  Moreover, there is increasing evidence that operating firms, often participants in SDOs, have been transferring significant numbers of SEPs to PAEs for enforcement purposes in privateering transactions. PAEs accounted for approximately 19% of patent assertions between 2000 and 2008 in Germany and 9%…

Matthew Sipe ‘Patent Privateers and Antitrust Fears’ (2016) 22 Mich. Telecomm. & Tech. L. Rev. 191

this paper – which can be found here – deals with the relationship between patent assertion entities (a.k.a. patent trolls) and antitrust. This relates to privateering,  a practice through which a firm sponsors the assertion of IP claims by third parties (so-called patent assertion entities (“PAEs”)) with the ultimate objective of raising competitors’ costs without disclosing who is ultimately behind this practice. However,  PAEs act for themselvesin most cases, and their actions are not necessarily anti-competitive. PAEs are merely entities that acquire and enforce patents without actually practicing them – their business model is predicated on acquiring licensing fees from entities that actually provide goods and services (so-called “operating entities”). PAEs have been severely criticised, and it has been suggested that antitrust be deployed against them.  At first glance, the nexus between antitrust law and PAEs seems clear: if litigious patent trolls are unfairly deteriorating the markets for various patented goods, antitrust law can step in and reassert the proper rules…