Unpacking Patent Assertion Entities (PAEs)

Abstract

In Part I, we explain several theories on why PAEs are beneficial or detrimental to the patent system. These theories outline distinct categories of patent holders who enforce their patents. Transforming the distinct categories into a coding scheme, we detail in Part II the methodology we used to generate the dataset. Part III provides descriptive statistics of 2010 and 2012 patent litigation. We discuss implications of the data, including points of disagreement between our data and the data of others, in Part IV. We also describe some areas of future study, many of which we are presently undertaking. Finally, we provide a brief conclusionCo-authored with Jay Kesan and David Schwartz

Crafting Intellectual Property Rights: Implications for Patent Assertion Entities, Litigation, and Innovation

“…They are consistent with the view that PAEs have a comparative advantage in patent litigation and therefore handle patents that are subject to a higher litigation risk, induced by the way examiners handle patents during prosecution. The fact that examiner leniency is an important driver of litigation for both PAEs and practicing firms, although the effect is not as large for the latter, is in line with a nuanced view of PAEs (e.g., Lemley andMelamed 2013 andKesan 2014). According to this view, PAEs do not exploit imperfections of the legal system in an idiosyncratic way, but behave as litigation experts.…”

Patent Licensing, Technology Transfer, and Innovation

“…Although different scholars slice the numbers differently, the data are remarkably consistent across studies with all showing that, under a broad definition, NPEs now account for the majority of patent lawsuits filed (Feldman et al 2013;Cotropia et al 2014).…”

Patent privateering, litigation, and R&D incentives

“…Bessen, Ford, and Meurer () analyze stock market events around PAE lawsuits and estimate a loss of about half a trillion dollars to defendants over the period 1990–2010. Bessen and Meurer () estimate that the direct costs of PAE assertions was about $29 billion in 2011, although some studies (Schwartz and Kesan, ; Cotropia, Kesan, and Schwartz, ) have pointed out caveats in these findings. Ewing (), Sipe (), and Layne‐Farrar and Schmidt () study patent privateering in particular—they explore the topic from the perspective of legal scholars, providing a description of the problem and examples, but not analyzing the equilibrium consequences of privateering.…”