The Truth Behind Patent Trolls Issue Brief

Introduction

Patent trolls have galvanized legislators to create legal solutions to economic problems. Legislation considered in the current congressional cycle seeks to curb patent troll activity through restricting enforcement methods for patents, such as demand letters. This issue brief is designed to provide an overview of patent troll activity and provide recommendations for proponents of patents and innovation as they seek to curb patent troll activity.

What is a Patent Troll?

No agreed-upon definition of patent troll exists. The term patent troll is used interchangeably with non-practicing entities (NPEs) and patent-assertion entities (PAEs). Despite similar sounding names, several key differences exist between the three terms.

Non-practicing entities own patents, but do not necessarily create products out of these patents. This behavior is pretty common. Get statistics about number of patents not used Universities are examples of non-practicing entities. Faculty members may file for patents based on their work in a laboratory and receive a patent. Then, those faculty move on to a different project and do not use the patent they hold.

Patent-assertion entities are a type of non-practicing entity that generate a majority of their revenue through licensing patents they own. For example, a large firm may buy up a thousand patents. Instead of creating products derived from those patents, they license these patents to other firms that wish to create those products. If another firm infringes on a patent, the patent-assertion entity may send a demand letter to the company with a warning. The demand letter warns the infringer that they are subject to a lawsuit if they do not acquire proper licensing of a patent. Maybe present some story to get the point across easier.