Are NPEs the threat to innovation the administration thinks they are?

IP Value Wire has reported extensively on the attempts to curb the power of non-practicing entities, aka patent assertion entities, that, in the president’s words, “don’t actually produce anything themselves.” Little is written in support of such businesses, and now the administration has revealed a multi-pronged strategy to limit their ability to exercise and enforce patent rights duly owned.

Now a 47-page white paper issued by Yale faculty warns against an over-reaction, suggesting strongly that patent assignments have long been a part of the patent landscape in the U.S., and the availability of assignment options represents a significant portion of patent value. Implied in the paper is the admonition that the U.S. should tread carefully in regulating patent assignments, lest they adversely affect the very “innovation” they are trying to stimulate. “Throughout U.S. history, the alchemical lure of the market for patents has provided a powerful incentive for technological creativity at the same time as it has attracted opportunists.”

The authors point out that NPEs are not a new phenomenon, nor is the practice of inventors assigning their invention to others.  In fact, through most of U.S. history, it has been common for inventors to profit from their ideas by selling off or licensing the patent rights.

“Researchers Zorina Khan and Kenneth Sokoloff compiled a dataset on the careers of nineteenth-century “great inventors” whose technological achievements were important enough to merit entries in the Dictionary of American Biography. They found that inventors who started their own businesses accounted for less than a quarter of the patents obtained by this group during the late nineteenth century.” For instance, Thomas Edison depended heavily on assignments to finance the early stages of his inventive career.