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I 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. [ABSTRACT FROM AUTHOR]

Research Summary: Non‐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 Summary: Non‐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. View Video S1 [ABSTRACT FROM AUTHOR]

Patent monetisation is an important source of revenues worldwide. This activity is increasingly carried out by patent assertion entities (PAE), which are at the origin of about 40% of infringement actions filed in the United States. This paper uses an original database of US patents reporting PAE patent acquisitions. We document two key empirical facts about the presence of PAEs in the market for patents. First, PAEs build large patent portfolios and contribute significantly to patent transfers in the US. Second, their impact on follow-on innovation is, on average, negative. With a series of dynamic diff-in-diffs analyses, we estimate a significant post-transfer drop in forward citations received by patents acquired by PAEs. This drop is not immediate but takes some years to materialise. Heterogeneity tests show that our results are driven by acquisitions of old and highly cited patents, as well as by patent acquisitions by large patent aggregators. [ABSTRACT FROM AUTHOR]

This Article describes how the original understanding of properly granted patents, from Renaissance Italy to the Patent Act of 1836, generally required tangible proof of the thing to be patented's immediate commercializability and its benefits to society at large, along with ready access to courts or other means to challenge improperly-granted patents (under ordinary standards of proof), as such improperly-granted patents were understood to constitute unjust monopolies that deterred, rather than facilitated, desired innovation. That original understanding is then contrasted throughout to the patent litigation system as it exists in America today in which challengers of improperlygranted patents are effectively denied access to court, while "patent trolls" can come to own vaguely-worded or overly-broad patents that should never have been granted and, without ever producing anything themselves, assert those patents in court under a "presumption of validity" to extort resources from productive enterprises that, unlike the trolls, are making products people want. The situation now--in which the original understanding of the purpose of the patent laws is so diametrically opposed to patent law's operation today--invites reform by supporters of the patent law's original design. [ABSTRACT FROM AUTHOR]

Importantly, if that company had dissolved after Henry Ford ended his employment there, all the firm's assets may have been liquidated to pay for its closing expenses.[72] Selden could not sue a company that no longer existed, nor could he sue Henry Ford or Ford Motor Company for a patent reassigned to a bankrupt firm that had dissolved its business ties. By coalescing behind the Selden automobile patent, all vehicles manufactured by Winton's firm had to be marked with signage that stated the date and patent number from the information presented on the Selden automobile patent certificate. In 1895, George Baldwin Selden patented an American automobile that utilized an updated Brayton-style engine. According to the Ford Motor Company and C. A. Duerr's response to the EVC bill of complaint with the US Circuit Court of the Southern District of New York, the original Selden automobile patent changed in many different ways as the sublicensees expanded on the design specifications of their "honest" vehicles.[52] For example, during the Selden case, the Rochester-Selden - the first vehicle based on Selden's patent specifications - was constructed by Henry R. and George B. Selden Jr.[53] Subsequent vehicles were redesigned and manufactured differently from the original Selden prototype. [Extracted from the article]

To what extent and with what effect do owners of standard-essential patents (SEPs) "hold-up" companies that produce standard-compliant products? To explore this question, we construct measures of opportunistic patent licensing behaviors using detailed information collected from the dockets of U.S. patent cases filed (2010–2019) to enforce SEPs and a matched sample of non-SEPs. Overall, we find evidence of at least one opportunistic behavior by the patent enforcer in approximately 77% of SEP and 65% of non-SEP assertions in court. However, these figures mask important heterogeneity across types of conduct. There is significantly more opportunistic conduct that tends to increase a potential licensee's loss if the patent enforcer prevails in court: 35% of SEP assertions versus 10% of non-SEP assertions. In contrast, conduct that tends to increase a potential licensee's litigation costs is less common, and the difference between SEP assertions (8%) and non-SEP assertions (6%) is small. We also show that opportunistic behavior is associated with case settlement, with the direction and strength of the correlation depending on the type of opportunistic behavior. Behavior that increases a potential licensee's litigation costs is associated with an increase in the probability of settlement, while behavior that increases a potential licensee's loss if the patent enforcer prevails in court is negatively associated with settlement. [ABSTRACT FROM AUTHOR]

This Article draws on a newly constructed multilayered relational dataset of patent infringement cases to assess hypotheses about different types of patent asserters and what happens in appeals of those cases. We situate this Article within the ongoing debates around companies that acquire patents but do not themselves practice the claimed technologies, particularly patent assertion entities (PAEs). We find that for some aspects of appeals, such as whether there was an appeal in a patent infringement case, cases brought by PAEs look similar on appeal to cases brought by product companies. But we also observe some substantial differences among litigant types--in particular, whether cases filed by PAEs are appealed more often and who is filing the appeals in those cases. We also observe that, regardless of the patent asserter type, most appeals are filed by patent owners, not accused infringers. Furthermore, even accounting for this difference, accused infringers are more successful on appeal than patent asserters--again, regardless of the type of patent asserter. [ABSTRACT FROM AUTHOR]

We analyze the extent to which private defensive litigation insurance deters patent assertion by non-practicing entities (NPEs). We study the effect that a patent-specific defensive insurance product, offered by a leading litigation insurer, had on the litigation behavior of insured patents' owners, all of which are NPEs. We first model the impact of defensive litigation insurance on the behavior of patent enforcers and accused infringers. We show that the availability of defensive litigation insurance can have an effect on how often patent enforcers will assert their patents. We confirm this result empirically showing that the insurance policy had a large, negative effect on the likelihood that a patent included in the policy was subsequently asserted relative to other patents held by the same NPEs and relative to patents held by other NPEs with portfolios that were entirely excluded from the insurance product. Our findings suggest that market-based mechanisms can deter so-called "patent trolling." (JEL: G22, K41, O34) [ABSTRACT FROM AUTHOR]

Research summary: Patent assertion entities (PAEs) are intermediaries that acquire patents from inventors and license them to firms that use the intellectual property to develop products. We consider how PAE intermediation influences inventor behavior by reducing the costs to monetize their inventions. Using a proprietary dataset that tracks PAE lawsuits, we find that, as PAE intermediation for a given class of technologies increases, larger numbers of focused inventors (i.e., small firms, universities, and labs) that typically lack commercializing capabilities begin to produce inventions in this class. Further, we find that, compared to their larger counterparts, focused inventors are particularly responsive to increasing PAE intermediation by producing greater numbers of inventions, albeit inventions that likely advance the state of the art only incrementally. Managerial summary: Patent assertion entities (PAEs) serve as brokers of intellectual property by purchasing patents from inventors and licensing these patents to firms that develop products based on them. We investigate how PAE brokerage activities influence inventors. We find that as PAEs become more active in a particular class of patents, inventors who lack commercialization capabilities (e.g., small firms, universities, and research labs) are particularly prone to both begin patenting and increase their rate of producing patented inventions in this patent class. We also find, however, that as PAEs become more active in a given patent class, patented inventions produced by inventors lacking commercialization capabilities are increasingly incremental in nature as compared to patented inventions produced by larger firms that commercialize products. [ABSTRACT FROM AUTHOR]

The article considers whether the U.S. might benefit from a strict pleading standard for direct infringement by comparing its pleading standard to that of the United Kingdom. It mentions discrepancy in the prevalence of patent trolls between the two countries might indicate that a stricter pleading standard like that in the United Kingdom might help the U.S. in its fight against patent trolls.

Many patent assertion entities (PAEs) hide behind multiple unknown subsidiaries or shell companies with obscure ownership. Meanwhile, the United States Patent and Trademark Office (USPTO), like many other patent offices, does not impose a strict time period for recording the change of ownership of a patent, allowing the holder to gain an advantage by controlling the timing of its ownership disclosure. In this paper, we study to which extent PAEs delay the recording of the U.S. patent reassignments of patents that they will subsequently use in infringement patent lawsuits. On average, PAEs notify the change of ownership more quickly than producing firms, but this is not the case for the patents that they will litigate relatively far in time. In particular, the correlation between the recording lag of the patent transaction and the litigation spell is higher when the patent acquirer is a PAE (than when it is a producing firm) or when the acquirer will litigate the patent in the Eastern District of Texas, famously home to opportunistic litigations. Finally, we find that transactions involving unknown subsidiaries of PAEs are recorded at the USPTO significantly later than those involving PAE parent companies or their known subsidiaries. [ABSTRACT FROM AUTHOR]

Venture-backed startups play a crucial role in innovation and advancing our technology. However, the development of secondary markets for patents and the proliferation of patent assertion entities starting in the early twenty-first century has made the patent ecosystem a difficult environment for startups to navigate. Startups face challenges that their more established counterparts do not. First, startups must rely heavily on external sources of funding and, as a result, many decide to file for patents early in their lifecycle to signal their value to potential investors. Second, patent assertion entities threaten startups with patent infringement suits at a disproportionately high rate, which disrupts startups' productivity and diverts their limited resources. This Note explores the "vicious patent cycle." The cycle begins when startups file patents to signal worth. Then, when 90% of these startups fail, they leave behind patents that grow the "patent thicket" as well as opportunities for patent assertion entities to stifle innovation. Together, these negative externalities exacerbate the challenge of building a new company. Unfortunately, the United States patent system is not well suited to put an end to the cycle. Thus, this Note introduces a solution for startups: the small business commercialization patent. The small business commercialization patent is a modified form of the commercialization patent introduced by Ted Sichelman but is tailored to meet the unique needs of venture-backed startups. [ABSTRACT FROM AUTHOR]

In its May 2017 decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, the Supreme Court reined in the Federal Circuit's permissive venue standard, which had fueled the rise of the Eastern District of Texas as the busiest patent trial court in the nation and the preferred filing location of patent assertion entities (PAEs), derisively known as patent trolls. While the new limits of permissible venue in patent cases continue to be demarcated in the lower courts, sufficient time has passed since TC Heartland to begin to investigate the impact of the decision across a number of dimensions. Accordingly, in this study I examine changes in the volume of cases filed nationally and in leading districts by comparing the numbers one year before versus one year after the decision. Further, I separately study changes in the location, volume, and distribution of PAE and practicing entity litigation. Finally, I examine how plaintiff adherence to the new venue standard in TC Heartland has changed defendant connections to the districts where they are sued. As others have predicted, I find evidence that the largest shift in patent litigation has been from the Eastern District of Texas to the District of Delaware. Specifically, 72 percent more patent cases were filed in the District of Delaware and 68 percent fewer cases were filed in the Eastern District of Texas the year after TC Heartland compared with the year before the decision and the decline in filings in the Eastern District of Texas is entirely attributable to PAEs. Further, changes in filing trends before and after TC Heartland indicate that between 320 and 780 fewer PAE lawsuits were filed the year after than would have been the case had the Supreme Court not restricted venue. Had these cases been filed, they would have comprised between fourteen and thirty-three percent of PAE filings for the year. Closer defendant connections to the courts where cases were filed post-TC Heartland suggest not only that PAEs perceived significant benefits from filing in the Eastern District of Texas and other pro-plaintiff venues, but also that many PAEs believe they are less likely to succeed on defendants' home turf. Comparing the year before with the year after TC Heartland, the share of PAE suits filed in the court containing a defendant's principal place of business jumped from nine to thirty-two percent and the share filed where a defendant is incorporated spiked from ten to forty-eight percent. [ABSTRACT FROM AUTHOR]

Healthy organisms inevitably produce cancer cells, and vibrant patent systems inevitably let bad patents slip through. These patents are harnessed by entities that leverage the uncertainty and expense of litigation to extract licenses from technological practitioners. Postissuance patent review (PIPR) has emerged as an invaluable error-correcting mechanism to prevent the socially harmful assertion of improperly issued patents. The United States, with the America Invents Act, established a new system for PIPR, expanding administrative routes to curtail bad patents. Europe is going a step farther with the Unified Patent Court Agreement (UPCA). The UPC A enables a lowcost patent revocation action on a broad range of grounds and with a relaxed standing requirement. But this is an opt-in system with a loser-pays fee-shifting arrangement. Thus, although the structure of the Unified Patent Court (UPC) appears to be set up to facilitate efficient PIPR, the disincentives for opting in suggest that the UPC will be a less effective troll-fighting vehicle than expected. Indeed, patent trolls may simply opt for national patent systems. [ABSTRACT FROM AUTHOR]

The article focuses on the problems of patent licensing negotiations and license deals made by companies and individuals outside of litigation. Topics discussed include patent assertions made by non-practicing entities; divergence between the actual and reported litigation numbers; and an account of data from litigation with respect of the same.

This study examines the threat of "patent trolls" to businesses, particularly small and medium-size enterprises (SMEs), and offers suggestions on how to handle this threat. Patent trolls are Non-Practicing Entities (NPEs) whose business models are based on litigation, not protecting and fostering innovation. Studies have shown deleterious effects of this rampant nuisance litigation, effectively reducing innovation and costing businesses millions of dollars responding to this threat. However, legislative and judicial reforms are having impact, and fighting this threat in the legal arena is becoming more effective. [ABSTRACT FROM AUTHOR]

Inter partes review (IPR) is one of several mechanisms for vetting patents after they have been granted. While the purpose of IPRs is to provide a cheaper, more expert alternative to litigation for screening out bad patents, the devil is in the design details. For example, the inclusion of key procedural features in IPRs, such as fixed time frames and expanded discovery contributed to making it far more popular than its predecessors. As the United States weighs additional changes to the administration of IPRs, including expanding the basis for amendment and unifying standards of review, it is worth considering the experiences of the European Patent Office (EPO) and Germany with their parallel opposition and nullification (revocation) procedures. This Article compares and contrasts U.S. IPR, EPO opposition, and German revocation actions and explores what they suggest, collectively, about the optimal design of post-grant review systems. Despite heightened concerns in the United States about IPR invalidation rates, outcomes are comparable across the three venues: 81% of reviewed claims and 26% of claims challenged in U.S. IPR proceedings are cancelled; 68% of patents reviewed and 63% of patents challenged in EPO opposition proceedings are amended or canceled; and 73% of the patents reviewed and 28% of the patents challenged in German revocation proceedings are partially or fully invalidated. But seemingly slight differences have contributed to the distinct roles each proceeding plays in its domestic patent system. The relative slowness of German infringement actions has translated into a parallel district action stay rate of 10-15%, as compared to an 80% stay rate among U.S. district court litigations that proceed in parallel to the IPR. Patentees also have fewer rights in U.S. IPRs than they do in EPO opposition proceedings, but have substantial rights to amend and can expect consolidated challenges. Focusing on how small differences have had big impacts on procedural and substantive outcomes, this Article discusses the implications of features such as the ability to amend and pre-institution decisions on the design and efficacy of post-grant patent reviews. [ABSTRACT FROM AUTHOR]

This paper examines the confluence of two important issues concerning patent law. The two issues are the merits of the debate concerning the supposed "patent troll" crisis and the increased patenting and licensing of university and other nonprofit inventions, including the litigation of those patents. First, there is a debate in the literature concerning the presence and scope of the problem concerning so-called "patent trolls." To some, supposed "patent troll" behavior is ordinary litigation behavior, and to others, it points to problems with the patent litigation system. Indeed, some may argue that the benefits of "patent trolls" may outweigh the negatives; however, the literature is not clear on an answer to that question. The literature does point to certain factors which indicate when a patent holder may be abusing the system and behaving as a "troll." This paper provides a review and analysis of some important patent enforcement literature. Second, there is a substantial amount of literature concerning the patenting and licensing by universities and other nonprofits since passage of the Bayh-Dole Act in 1980. The Bayh-Dole Act allows universities and other nonprofits to patent government funded invention. The literature points to issues that may arise concerning university patent related activity, including some efforts by universities to lobby to protect their interests. This paper provides a review and analysis of some of that literature. Finally, this paper analyzes data from multiple sources at the confluence of those two issues, asking whether universities and other nonprofits are behaving similarly to so-called "patent trolls." Our research finds that in some instances universities and nonprofits may share some characteristics similar to "patent trolls." However, while we believe that casting a particular narrative over the data is relatively dangerous, there is cause for concern in the future. There are several factors that may make it more likely that universities and nonprofits will engage in additional litigation in the future, including perhaps abusive litigation practices resembling so-called "patent trolls." Indeed, several factors may place increased pressure on universities and nonprofits to find ways to monetize their patents. For example, the U.S. government appears to desire to cut research funding to universities, and universities will be searching for additional revenue streams. Moreover, most technology transfer offices fail to generate enough revenue to sustain themselves and will likely push for increased patenting, licensing, and even litigating to fund their operations. And, universities appear to be changing their tenure policies to encourage commercialization activities. As universities and their technology transfer offices search for funding, they may believe that commercialization and patent enforcement is the answer. We conclude that university and nonprofit litigation should be carefully monitored in the future, including patent litigation by academic and research institutions based outside the United States. [ABSTRACT FROM AUTHOR]

Despite widespread interest in the impact of patent assertion entities ("PAEs") on the U.S. patent system, there has been no publicly available dataset that categorizes more than a fraction of lawsuits as involving practicing entities, non-practicing entities ("NPEs"), or PAEs. To address this knowledge gap, Stanford Law School student researchers, led by Mark Lemley and Shawn Miller, have created the Stanford NPE Litigation Dataset ("the Dataset").? The Dataset is the first comprehensive patent litigation dataset to categorize patent asserters and will do so for every U.S. patent lawsuit filed since 2000. With over 80% of total cases categorized as including practicing entities or one of eleven types of NPE patent asserters, the Dataset is nearing completion of the 63,000 lawsuits filed between 2000 and 2017. Thereafter, we will continue to update the Dataset with more recently filed lawsuits. The Dataset provides an invaluable tool to help policy makers craft effective rules, and help judges, litigators, and scholars better understand the nature of the entities filing patent suits. This is especially true because the Dataset captures how patent litigation patterns evolve over an era of heightened activity and policy reform. The Dataset will reveal trends before and after passage of the America Invents Act, key Supreme Court patent cases including eBay and Alice, and various executive orders focused on increasing transparency and reducing costs in patent suits. The first half of this paper explains the motivation for creating the Dataset and details the methodology used to create it. At present, we have completed and made public a random sample of 20% of the lawsuits filed from 2000 through 2015 (10,812 lawsuits).1 We utilize this sample in the second half of the paper to reveal, for the first time ever, trends in the share of patent disputes attributed to different types of patent asserters over a span of sixteen years. These trends show that while practicing entities dominated patent litigation in the first half of the 2000s, NPEs and PAEs now assert patents in most lawsuits. Further, the trends show that the rise of NPEs and PAEs began before--and thus is not attributable to--the 2011 change in joinder rules. We hope this data will be used to further policy discussions and therefore conclude this paper with examples of how the Dataset can be used in future research on the impact of different types of patent asserters on the patent system. [ABSTRACT FROM AUTHOR]

Patentees who are successful in litigation are entitled to no less than a "reasonable royalty" for the infringing use of the patent. Currently, reasonable royalties are assessed by the fact-finder using the cumbersome, difficult-to-apply fifteen- factor Georgia Pacific test. The Georgia Pacific test has been widely and roundly criticized, and there is general agreement that it too often hinders patent law's central goal: promoting technological innovation. To improve the reasonable royalty analysis, this article proposes adding innovation-centric factors to the Georgia Pacific test, including the total amount spent on research and development (R & D) and commercialization of the invention, taking into account opportunity costs and project-specific risk. Additionally, the article suggests emphasizing a slightly modified version of one existing innovation-centric, Georgia Pacific factor: the technological benefits offered by the invention when compared to alternative approaches. Like the "objective" factors used to make determinations of whether a patent is obvious, these innovation factors will help fact-finders to make more accurate and more consistent reasonable royalty determinations while more ably advancing patent law's goal of spurring innovation. [ABSTRACT FROM AUTHOR]

The article focuses on efficient allocation of patent damages liability within the supply chain and deterioration of patent notice and the related rise of inadvertent patent infringement and patent assertions by non-practicing entities. It mentions patent litigation and settlement bargaining rather than ex ante licensing and avoidance of infringement suits. It also mentions insurance agreements allow parties to shift control of settlement and defense in patent litigation.

Over the last decade, a growing consensus has emerged: there are too many patents, and they are causing a host of problems. These problems include patent "trolling," patent "wars," and other wasteful societal costs. In explaining this patent overabundance, some scholars have pinpointed the United States Patent Office, the governmental body responsible for issuing patents, as the main culprit. Others have blamed patent holders themselves, identifying a number of incentives these parties have to pursue patents even in cases where doing so makes little economic sense. Overall, these analyses thus typically assume a high and relatively uniform demand for patents among inventive parties--one that the United States Patent Office is only too willing to satisfy. Yet this focus on excessive patenting obscures the reality that parties likely differ significantly in their demand for patents and other forms of intellectual property. In economic parlance, different inventive parties are likely to exhibit different "elasticities," or sensitivities, in their demand for patents and other types of intellectual property. This Article uses economic principles to disaggregate intellectual property demand by highlighting a number of factors that may affect a party's demand for patents and other forms of intellectual property. It argues that resource-constrained parties are more likely to exhibit more elastic demand for patents, meaning they are more sensitive to the costs of patenting, both in general and relative to the costs of other intellectual property forms. As a result, rising costs of patenting are more likely to lead resource-constrained parties to forego patenting and rely on alternative, cheaper forms of intellectual property protection when available. Well-capitalized parties, on the other hand, are more likely to exhibit relatively inelastic, high demand for patents, regardless of the costs of other intellectual property types that may otherwise function as substitutes. Thus, well-capitalized parties tend to patent en masse and complement patenting with additional intellectual property protections when available. With this theoretical framework in place, the Article then assesses several recent judicial and legislative changes in patent and trade secrecy laws, including the Defend Trade Secrets Act of 2016, the Leahy-Smith America Invents Act of 2011, and several important Supreme Court patent law cases. Overall, these changes have largely weakened patent rights while potentially strengthening other forms of intellectual property law such as trade secrecy. Many argue the patent law changes in particular are a step in the right direction. This Article's analysis suggests these changes may suppress resource-constrained parties' demand for patents while having little to no effect on well-capitalized parties' demand for patents or other forms of intellectual property. Hence, these intellectual property changes may mean that resource-constrained parties patent even less relative to their well-capitalized counterparts, instead relying on other forms of intellectual property when available. The Article concludes by assessing this possibility and other potential implications for intellectual property law, innovation, and the economy more generally. [ABSTRACT FROM AUTHOR]

Over the last decade, much of the patent law literature has focused on the problem of “patent trolls,” or patent owners who don’t make products, but sue others that do. The basic complaint against these types of entities is that they impose a tax on innovation without providing offsetting societal benefits. Furthermore, their patent assertions have been on the rise, with a significant percentage of patent suits now attributable to them. In short, the troll phenomenon suggests a problem of excessive patent assertions. But despite the importance of the troll phenomenon, the fact remains that most patents are never asserted, or are asserted less than they could be. Under-assertion of patents thus appears to be more prevalent than over-assertion. Yet, beyond noting a set of generic economic considerations that may lead to this outcome, the literature fails to provide systematic, industry-specific assessments of why patent owners choose to forego asserting their rights in so many cases. And the generic nature of these assessments is particularly problematic given that patents play significantly different roles from one industry to the next, as scholars have noted for some time. This Article addresses these issues by providing an industry-specific, informal model for theorizing why patent owners forego asserting their rights in so many cases (and why they may not in others). It briefly applies this model to four industries: software, pharmaceuticals, biotechnology, and semiconductors. The Article then explores some potential implications of this industry-specific model. In particular, this Article suggests that high barriers to patent assertion in an industry may, ironically, result in increased patent trolling in the industry. Hence, this Article provides guidance to policymakers by helping explain the rise of patent assertions in some industries, such as software, as well as helping to identify other industries, such as biotechnology, that may be increasingly at risk of patent trolling. [ABSTRACT FROM AUTHOR]

Non-practicing entities (NPEs), some of which are also labeled patent assertion entities or "patent trolls," play a disputed role in our modern patent system. These entities, which do not make and sell products or services that embody their patented technologies, file a large percentage of all patent lawsuits. The perceived patent "troll" problem has dominated the discussion of patent reform in recent years. The policy debate is complicated by disagreement over who counts as a "patent troll," and by debates over whether NPEs are inherently problematic or whether the real problem consists of entities (practicing or not) that assert weak patents. In this Article we present empirical results that provide insight into both questions. Drawing on a comprehensive data set we built of every patent lawsuit filed in 2008 and 2009 that resulted in a ruling on the merits, we find that the situation is rather more complicated than simply comparing operating companies to NPEs. While operating companies fare better in litigation than NPEs overall, breaking NPEs into different categories reveals more complexity. And once we remove certain pharmaceutical cases from the mix, no patent plaintiff fares very well. That is particularly true of software, computer, and electronics patents. [ABSTRACT FROM AUTHOR]

The article discusses several changes involving the U.S. patent law system as of 2016, and it mentions the concerns of American attorneys regarding the overprotection and underprotection of patents, the nation's Patent and Trademark Office, and nonpracticing entities (patent trolls). The legal aspects of patent eligibility, remedies, and an obviousness patent doctrine are examined, along with forum shopping and research involving patent lawsuits in America between 1980 and 2012.

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 the "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. Ten years later, however, significant questions remain regarding how this four-factor test is being applied, as 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 7.5-year period following eBay. It finds that eBay has effectively created a bifurcated regime for patent remedies, as 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-competitors and other non-practicing entities are generally 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. This Article 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. [ABSTRACT FROM AUTHOR]

The patent system is usually described in terms of opposites, like producers versus trolls or software versus pharma. But the reality is a far more complex set of layers, including enforcers, patentees, and technology. This study of 25 years of patent litigation by highly litigious non-practicing entities ("NPEs") and randomly selected plaintiffs explores each of these layers and shows ways that each interacts with the others, using patent validity as a primary exemplar. Data related to more than 1000 patent outcomes in more than 2000 cases leads to some surprising findings. For example, while the litigious NPEs enforced many patents from product companies and public companies, the patents enforced by random companies were more likely to come from larger and better-funded companies. Additionally, the data implies that patents obtained by individuals fared worse in litigation, regardless of who enforced them. Most surprisingly, once patentee and enforcer type is considered, software patents are no longer a statistically significant predictor of invalidation. The layering of the system shows that simple stories describing one layer at a time cannot answer the questions that face the patent system. The interconnections between the layers of the patent system point the way. [ABSTRACT FROM AUTHOR]

The article argues that opening patent portfolios not only fosters innovation but also significantly decrease litigation and transaction costs for companies. It provides an overview of the U.S. patent system and examines the advantages and problems associated with the modern patent system and shows how an open source model presents a useful solution to the patent puzzle. It points out that the U.S. patent system stunts innovation and allows patent trolls to abuse the legal system.

This Article undertakes a broad-based empirical review of intellectual property ("IP") litigation in U.S. federal district courts from 1994 to 2014. Unlike the prior literature, this study analyzes federal copyright, patent, and trademark litigation trends as a unified whole. It undertakes a systematic analysis of the records of more than 190,000 cases filed in federal courts and examines the subject matter, geographical, and temporal variation within federal IP litigation over the last two decades. This Article analyzes changes in the distribution of IP litigation over time and their regional distribution. The key findings of this Article stem from an attempt to understand long-term patterns in the filing data as well as short-term deviations from various trends. This data-driven approach has yielded insights in relation to such diverse topics as Internet filesharing litigation, the true impact of patent trolls on the level of patent litigation, and the extent of forum shopping and forum selling patent litigation. Just as importantly, this Article lays the foundation for planning and evaluating future empirical studies of IP litigation with a narrower focus. Many of the results and conclusions herein demonstrate the dangers of basing empirical conclusions on narrow slices of data from selected regions or selected time periods. [ABSTRACT FROM AUTHOR]

A court may award attorney fees to a prevailing party in a patent trial under exceptional circumstances. Since 2005, courts had applied a rigid formula to determine whether a case was exceptional. In the summer of 2014, the Supreme Court rejected this rigid test. Instead, the Court held that an exceptional case is "simply one that stands out from others. " Finding a case exceptional, the Court said, was at the discretion of the district court and only reviewable on appeal for an abuse of discretion. A year and a half later, one interesting question is: How do district courts now determine what cases are exceptional in the absence of a more formulaic approach ? The analysis of several cases decided soon after the Supreme Court's decision reveals that district courts primarily analyze a party's litigation position and litigation conduct to determine whether-- in its discretion-- to award attorney fees. To a lesser degree, district courts have also awarded attorney fees to deter infringement and unsavory litigation practices. However, the deterrence rationale has the potential to be problematic: its purpose is to deter litigation practices, but given the current legal climate it could be used to unfairly penalize litigants that might be classified as "patent trolls. " The existing literature on the award of attorney fees in patent cases sheds very little light on the problems district courts ' reliance on the deterrence rationale could present. This Essay addresses these problems and offers practical insights as to when courts should rely on the deterrence rationale to award attorney fees. The Essay points out that what makes a case exceptional should have little to do with the identity of the parties. In addition, this Essay prescribes that district courts should not take into account the business model of the parties to justify deterrence as a rationale for awarding attorney fees. [ABSTRACT FROM AUTHOR]

The article examines the liberalized fee-shifting framework for patent cases in the U.S. Topics discussed include laws aimed to prevent patent trolls in the country; remedial approach to abusive patent litigation; the costs of patent litigation; and the role that abusive patent litigants play in the liberalization of fee-shifting in patent cases.

Patent litigation has multiplied sixfold since the 1980s, with the last few years seeing an unprecedented number of patent lawsuits. When an inventor receives a patent, the U.S. Constitution grants him a monopoly for a limited number of years to reward him for his investment of time and resources and to incentivize him to continue innovating, which ultimately benefits society. However, the emergence of a litigious character, deemed the "patent troll," has led to the patent system's hindrance of innovation, a result that is at odds with the primary goal of patent law. Patent trolls exploit weaknesses in the patent system in a number of manners: they assert overly broad patents to force companies into financial settlements because these companies cannot afford the cost of litigation; they deter innovative companies from investing in research and development through the threat of litigation; and they do not practice the patents they hold, thus contributing no innovation in the advancement of technology and immunizing themselves from countersuit. In addition, trolls exhibit anticompetitive behavior, a trend that has caught the eye of the Federal Trade Commission. This Note provides a survey of the modern patent landscape, addressing certain areas of the patent system that patent trolls are able to use to their advantage. This Note then advocates that the Federal Trade Commission play a more integral role in curbing anticompetitive troll behavior and proposes several methods of patent reform. [ABSTRACT FROM AUTHOR]

The article reports on the decision of the U.S. Supreme Court cases in two court cases including "Octane Fitness LLC v. ICON Health & Fitness Inc." and "Highmark, Inc. v. Allcare Health Management Systems, Inc." Topics discussed include impact of the decisions on patent litigation involving patent trolls, the patent troll litigations, and shortcomings of the patent troll business.

Patents have become a serious business risk. They issue from the Patent and Trademark Office in record-breaking quantity and are aggressively enforced by patent trolls. But many patents are likely to be invalid; and even those which are valid are likely to be narrower than their owners claim. Firms investing in innovation would find it desirable to clear their respective fields of invalid or overbroad patents prior to making their investments, and there is great social value in reducing the number of such patents. But the path to determining the validity or scope of issued patents runs through the courts, and in recent years the Federal Circuit has developed special standing rules for patent challengers that allow access to the courts only when it appears that an infringement suit is temporally or legally proximate. In this Article, I criticize this "proximity" criterion on conceptual, doctrinal, and normative grounds and provide a comprehensive account of standing to challenge the scope and validity of patents. Conceptually, I argue that because patents are a form of regulation, their effects sweep more broadly than the Federal Circuit currently appreciates. When the risk of infringement liability deters business and investment activities, the affected parties can bring a "quiet title" action to obtain certainty about the validity or scope of adverse patents. I then argue as a doctrinal matter that there is no reason to treat patent challenges differently from other cases. Applying traditional principles of constitutional and prudential standing broadens the range of potential plaintiffs. Finally, I justify this result on normative grounds because the Federal Circuit's restrictive approach creates a misalignment between those who have incentives to challenge patents and those who have access to the courts. Allowing challenges by a broader range of plaintiffs will result in more socially valuable validity litigation. [ABSTRACT FROM AUTHOR]

The article focuses on conflicts in patent law arising from the prevalence of patent trolls in the U.S. Topics discussed include patent infringement defined by the U.S Patent and Trademark Office (USPTO), House Bill 117 passed in the Utah 2014 General Session for patent infringement and a brief history of the U.S patent law. It mentions the U.S Supreme Court case Octane Fitness, LLC v. Icon Health & Fitness regarding patent lawsuit fee-shifting.

The article discusses how the U.S. constitution's First Amendment may offer a solution to the problem of patent quality in software and business methods in the U.S. Topics discussed include the U.S. Supreme Court decision in the case "Alice Corp. v. CLS Bank," First Amendment remedy to the patent troll problem, and enactment of the Patent Act.

Injecting fresh oxygen into the strangled patent troll problem, professors Mark Lemley and Douglas Melamed advised us recently to change our focus from targeting specific entities that unduly burden technology users to addressing the underlying features of the patent system that account for "trollish" profits. Taking Lemley and Melamed's advice seriously, this proposal focuses on one specific feature of the patent system that it believes to constitute the heart and bones of the troll problem--the legitimacy of non-practiced patents (NPPs). Particularly, it suggests changing the paradigmatic understanding of the troll problem, into one that understands that the patents that are being exploited to impose litigation threats and extract settlements are the real problem, not those who assert them. Because such patents are not developed into actual products or services, their holders are immune to a counterclaim of patent infringement. For the same reason, the likelihood of entering into low-cost, cross-licensing agreements over such patents is almost impossible. NPPs--patents that are not developed promptly into sufficiently commercialized goods--are the essence of the patent troll problem. Pursuant to this refined conception of the troll problem, and borrowing from trademark law, this proposal contends that a patent working requirement, which requires all patent owners to promptly submit a proof of sufficient patent commercialization to the United States Patent and Trademark Office, excluding those having an acceptable excuse, may solve the patent troll problem. Under this model, the two fundamental features of NPPs that facilitate patent trolling could be no longer sustained. First, all patents will become suspected to a counterclaim of patent infringement. Second, low-cost, cross-licensing agreements will become essential to all patent exploitations. By substantially reducing the amount of NPPs, the proposed model is expected to thwart the assertion of useless patents against operating companies, consequently encouraging innovation and progress. At the same time, because it does not search for "bad actors, " the proposed model will allow different types of entities to operate in the market and support small inventors, so long as they promote commercially beneficial inventions. [ABSTRACT FROM AUTHOR]

Everyone hates patent trolls--those companies that "hijack somebody else's idea" and use the patents to "extort some money" from companies that actually make things. But, despite the rhetoric, not all patent trolls are created equal. This Article is the first to focus on one type of patent troll-- the formerly manufacturing entity. These patent trolls used to make or do something in commerce, but now derive all or a significant portion of their income through licensing their intellectual property. Using case study analysis, this Article demonstrates that formerly manufacturing entities do not impose the harms associated with patent trolls more broadly and, in fact, provide unique benefits for commercialization of new technologies. Specifically, formerly manufacturing entities do not "sneak up" on manufacturing companies, waiting for them to invest extensively in a technology before seeking a license. Rather, the technology and the patents are already out in the open, having been practiced by the patent troll. Further, because formerly manufacturing entities have already worked to commercialize the technology, they are in a much better position to assess its value, as well as the costs and risks associated with bringing it to market. We should recognize the benefits formerly manufacturing entities add to commercialization and, in the larger scheme, ensure that potential patent reform measures and judicial solutions to the patent troll problem are carefully drawn so as not to do more harm than good. [ABSTRACT FROM AUTHOR]

The article discusses several legal aspects of patent assertion entities (PAEs) which are also known as non-practicing entities (NPEs), patent monetization entities (PMEs), and patent trolls. The U.S. patent system and the impact of PAEs on the nation's economy are addressed. Patent suits in the U.S. and the country's America Invents Act are mentioned, as well as the legal rights of inventors. The costs associated with patent litigation in America are examined, along with the benefits of PAEs.