Patent Aggregators

AuthorRussell L. Parr
ProfessionPresident of Intellectual Property Research Associates
Pages313-325
CHAPTER 20
PATENT AGGREGATORS
A few companies have collected vast patent portfolios for the primary purpose of mon-
etization. They have no plans to enter into commercialization activities. They also rarely
conducted any research and development to enhance the technologies they have acquired.
They want to license out their patent portfolio and earn royalty income. They are called by
many names such as mass aggregators, non-practicing entities (NPEs), patent assertion enti-
ties (PAEs),and trolls. The derogatory troll label is based on their behavior,which involves
approaching an operating entity (successful company) and demanding royalty payments for
a patent that the troll owns and maintains covers a technology being used by the company.
Pay the toll, or you cannot cross the bridge to the magic marketplace.
Many executives of operating companies consider such behavior as extortion. They
argue that the activities of trolls, which often involve patent infringement lawsuits, divert
huge amounts of money that could be used by the targeted companies to enhance tech-
nology. They also argue that the trolls divert the attention of top and middle management
away from inventing and to defense at trials. However, while yelling about the harm being
done by trolls many are investing in the mass aggregators, providing the funds needed to
accumulate ever-larger patent portfolios.1In return for their investment, they are licensed
under the patent portfolio, which they can use as a defensive strategy in their own infringe-
ment lawsuits.
There is some basis for hating trolls, but as always there are two sides to the story.
Consider universities and research laboratories. The sole purpose of these entities is
to invent. They have no interest in entering into commercial activities and in fact have
none of the capabilities needed for successfully doing so. Yet, they still have property
rights and can license their inventions in order to earn royalty income to support their
inventing activities. They are not evil. They are just standing up for their property rights,
but they have many of the same characteristics as trolls, and if you infringe the patents of
universities and research laboratories, they will also sue you.
Also, consider the young company that was using its patented invention to provide a
needed service to the telecommunication industry. All was going well for them until a huge
client decided to establish a competing entity to provide the same service. The young com-
pany could not compete with the new and well-nanced competitor and went bankrupt.
The founders of the bankrupt company then purchased their patents out of bankruptcy and
asserted the patents against the new competitor in a patent infringement lawsuit. At trial,
1Full disclosure: The author of this book has provided litigation support and expert witness testimony services
regarding patent infringement damages for non-practicing entities and believes that anyone with valid property
rights should be able to assert their rights.
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