The NPE (“Patent Trolls”) Minefield

Non-Practicing Entities (NPEs) and Patent Assertion Entities (PAEs), also referred to as “patent trolls”, are causing heated discussions in the intellectual property space. They are commonly described as entities whose core business model is using IP to collect licensing fees instead of producing actual products. NPEs and PAEs can range from single inventors with sufficient resources to public companies and own portfolios ranging from a single patent to tens of thousands.

NPE-7-flattened“At the same time as NPEs create a market for IP, we see that some are stretching their claims and create serious disruptions for operating companies. Understanding this threat, or cost of doing business, is important for companies of all sizes”, says Johan Örneblad, Innovation lawyer at Origin Ltd.

Deltasight has visualised the NPE field with help from the comprehensive PatentFreedom NPE database and IP law firm Origin Ltd. And some really interesting trends have emerged from the data. Over the past decade there has been a six-fold increase in the number of companies sued by NPEs and an increasing number of cases are using controversial software and business method patents. It’s also an increasing trend for NPEs to use acquired patents instead of their own inventions – growing from 42% in 2005 to 58% in 2013. Companies are also becoming more likely to settle cases within a year from filing and younger companies are much more likely to settle quicker than large companies.

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