Do NPEs matter? Non-practicing entities and patent litigation outcomes

Michael J. Mazzeo*, Jonathan H. Ashtor, Samantha Zyont

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

11 Scopus citations

Abstract

It is widely argued that so-called "patent trolls" are corrupting the U.S. patent system and endangering technology innovation and commercialization at large. For example, a recent White House report argued that "trolls" hurt firms of all sizes and advocated for specific policies aimed at curtailing practices thought to be particularly harmful. Yet the existence and extent of any systematic effects of so-called "troll-like" behavior, and the implications of modern patent assertion practices by Non-Practicing Entities ("NPEs"), remains unclear. This article develops novel empirical evidence to inform the debate over NPEs on patent litigation. Specifically, we conduct a large-scale empirical analysis of more than 1,750 patent infringement cases decided by a judge or jury in U.S. district courts between 1995 and 2011.We focus on case outcomes, including findings of validity and infringement, and the distributions and values of resulting damage awards. We find some relatively small differences in terms of lower success rates and award values in cases where the patent holders are NPEs. Yet across the subset of cases in which damages are awarded to the patent holders, we find no significant differences in the distribution of awards between NPEs and practicing entities. Nonetheless, there are substantial differences in litigation behavior success rates, and award values among types of NPEs (that is, universities, individuals, and Patent Assertion Entities ("PAEs")). Moreover, we find evidence of certain NPEs engaging in strategic and rational patent acquisition, assertion, and settlement-licensing practices. We posit that these practices may reflect, or perhaps derive from, the economic separation of patent rights from their underlying technologies that is represented in NPE approaches to patent assertion.

Original languageEnglish (US)
Article numbernht031
Pages (from-to)879-904
Number of pages26
JournalJournal of Competition Law and Economics
Volume9
Issue number4
DOIs
StatePublished - Dec 1 2013

ASJC Scopus subject areas

  • Economics and Econometrics
  • Law

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