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Patent assertion entities that do not engage in abusive litigation are often burdened by the association with the term "patent troll." [http://www.bna.com/challenges-of-defining-a-patent-troll/] Proposed patent legislation in the 114th Congress fails to make a clear distinction between PAEs and patent trolls. The House Innovation Act (H.R. 9) and the Senate PATENT Act (S. 1137), two major bills proposing patent reform in the current Congress, do not differentiate between legitimate patent holders and patent trolls and threaten to make litigation even more costly and risky for all patent holders.
The patent market is In illiquid, meaning that assets markets where asets cannot be sold or exchanged easily. In illiquid markets, specialized intermediaries, like patent assertion entities, can help match patent holders to patent buyers and transfer ideas and technology from inventors to manufacturers effectively. This allows inventors to focus on innovation while benefiting from the knowledge and connections that intermediaries possess. Patent assertion entities are able to incentivize innovation through the effective brokerage of patents. [https://www.whitehouse.gov/sites/default/files/docs/patent_report.pdf] They manage risks for small inventors and inform manufacturers or inventors of the usefulness of having another inventor's patent in their patent portfolio. [http://www.bna.com/challenges-of-defining-a-patent-troll/] PAE litigation increased with the rise of technological innovation in the twenty-first century, but this does not mean that PAEs have stifled innovation with increased amounts of litigation. Rather, patent assertion entities lose 92 percent of trial cases based on merits. Some believe that this is a sign that PAEs do not have valid claims to the patents they possess; however, PAEs fail trial cases because they do not always properly show infringement. Because PAEs do not manufacture or sell products, they are not liable to counterclaims. This makes them more likely to make weak infringement claims, which leads to a lower-than-average success rate in cases ruled on merit. [https://www.fas.org/sgp/crs/misc/R42668.pdf]
The Truth Behind Patent Trolls Issue Brief (view source)
Revision as of 15:58, 6 April 2016
, 15:58, 6 April 2016→Why Patent Assertion Entities are Good for Innovation and Small Businesses
==Why Patent Assertion Entities are Good for Innovation and Small Businesses==
The current U.S. patent system restricts the market for innovation with high transaction costs and legal risks. [http://www.wired.com/2015/01/fixing-broken-patent-system/] Most small and medium-sized businesses are unable to afford the costs associated with patent litigation and are prevented from commercializing or licensing over 95 percent of current active patents. [http://www.wired.com/2015/01/fixing-broken-patent-system/] Therefore, many smaller-sized businesses rely on patent assertion entities to protect their patents and defend against expensive litigation. Patent assertion entities aggregate and manage patents and have the expertise to legitimately protect patents from infringement. [https://www.whitehouse.gov/sites/default/files/docs/patent_report.pdf]
According to the U.S. Census Bureau, small businesses (with less than 500 employees) made up 99.7 percent of employer firms in the United States in 2012. [https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf] Small firms produce more patents per employee than large companies and help drive innovation in the United States economy. The patents they develop have a greater impact and are often more technologically important than those of large firms. [http://www.imamidejo.si/resources/files/doc/analiza%20patentov%20v%20msp%20usa.pdf] The Small Business Administration reported that "although small firms account for only 8 percent of patents granted, they account for 24 percent of the patents in the top 100 emerging clusters." [http://sbecouncil.org/about-us/facts-and-data/] Because small businesses and emerging companies are not always able to protect their patents on their own and account for much of the innovation driving emerging industries today, they need patent assertion entities who have the power to protect their patents for them.
