Are non-practising entities opportunistic? Evidence from litigation of standard essential patents

Abstract

Are non-practising entities (NPEs)—firms that specialize in the enforcement of patent rights rather than the commercialization of patented technologies—more likely than other patent enforcers to behave opportunistically? To explore this question, we construct measures of opportunistic conduct by patent enforcers and document the presence or absence of these behaviours in a subset of US patent cases in which opportunism is especially likely to occur: cases that assert standard essential patents (SEPs). Our results suggest heterogeneity across different opportunistic behaviours. NPEs are more likely to exploit the SEP-declaration process and the SEP market’s lack of transparency, while practising entities (PEs) are more likely to pursue bans on the sale and importation of their products. We additionally present evidence that opportunism can affect case outcomes. Declaration and market-related opportunism are associated with a higher rate of settlement in NPE cases relative to PE cases.