Non-Practicing Entities: What are They and How Do They Work?

The term Non-Practicing Entities (NPEs) is used for individual inventors, universities and patent aggregators whose primary purpose is to enforce their patents through licences or litigation. In the past, NPEs were known as “patent trolls” or “patent assertion entities” (PAEs). Some NPEs license patents or sue organizations for patent infringement. However, not all NPEs do this. In fact, many of them help to enforce patents in order to protect legitimate patent holders from violations by infringers and pirates. Sometimes they can help inventors protect their rights and monetize their inventions by licensing them to other companies in exchange for royalty payments.

Types of NPEs

A. Holding companies

These NPEs buy and aggregate patents under one or more holding companies. They build patent portfolios against a popular or futuristic technology and then look at enforcing or licensing it to third parties.

Prominent NPEs of this type include:

·         Intellectual Ventures

An American private equity company that is focused on the licensing and development of intellectual property. It was formerly known for being a patent troll but now focuses on promoting innovation. In 2011, Intellectual Ventures was ranked as one of the top five owners of U.S. patents. Some of the company’s products include waterless washing machines and self-healing concrete. IV collaborated with Nvidia and bought some wireless broadband technology patents.

·         Acacia Technologies

An American company based in New York City that partners with patent owners such as universities and inventors to license infringed patents. Around 95% of the company’s business involves licensing infringed patents to corporations via patent litigation on behalf of patent owners.

B. Research Organisations and Universities

The model used by universities and research institutes is not new and existed before the term NPE was coined. These organisations excel at innovation and developing new inventions, but usually lack the funding, know-how, or resources to develop and monetize these advancements. So they employ dedicated technology-transfer offices (TTOs) that work towards licensing or sale of the patent portfolios related R&D prototypes that are created in-house. All of the top ranked universities (usually with post-graduate and doctoral specializations) that file patents fall into this category.

For example, prominent research institutes in the domain of 4G LTE are:

·         Electronics & Telecommunications Research Institute

For 3 consecutive years, the US firm IpiQ Global has ranked ETRI as No.1 for patent evaluation. This non-profit government funded research institute contributed significantly to LTE-Advanced. With over 2,500 patent filings, ETRI is one of the leading research institutes for wireless communication.

·         Industrial Technology Research Institute

ITRI is a non-profit research organization in Taiwan which owns 157 4G LTE patents. It is known for having the most talented researchers in the world.

Check out the full article on Non-Practicing Entities: What are They and How Do They Work? to learn more about their types and patent analyses.