Do NPEs provide a source of value to patent owners?

Michael Risch of Villanova University School of Law has taken a limited look at “patent trolls,” non-practicing entities, with a goal to understanding their role, including “testing” NPE “criticism” and “justifications.”

Risch concludes most of the factual criticisms of NPEs do not bear out:

  • NPEs are not a new phenomenon;
  • The patents litigated by NPEs are no dominated by business method patents;
  • The patent quality of the studied patents did not appreciably differ from that of other litigated patents; and
  • Very few of the companies supplying patents to NPEs are out of business.
Some justifications are wrongfully applied as well:
  • Evidence does not support that NPEs provide a market for patents;
  • In few cases are NPEs vindicating the rights of small companies forced out of business by infringers.
Finally, Risch believes the evidence does support one defense:  NPEs provide a better way (less expensive) for individual inventors to enforce their patents and thus promote their value ... more on this tomorrow.