infoJustice

Authors: Lauren Cohen, Umit G. Gurun, and Scott Duke Kominers

Abstract: We survey the empirical literature on non-practicing entity (NPE) litigation behavior and its consequences. We document both aggregate trends and cross-sectional differences amongst various types of NPEs. Survey evidence illustrates a number of ways in which NPEs can potentially act opportunistically, and indicates at least some instances and consequences of observed NPE opportunism. Large-sample empirical work has recently begun corroborating and amplifying the findings from survey evidence.

NPEs on average behave as “patent trolls.” Indeed, NPEs hold and frequently litigate patents that are likely to be at least partially invalidated; moreover, NPEs, target cash irrespective of its relation to alleged infringement. Cash-targeting is neither the main driver of practicing entity (PE) intellectual property (IP) litigation, nor of non-IP litigation against publicly traded firms. The empirical evidence suggests, however, that not all NPEs exhibit trolling behavior — the cash-targeting observed in the data is primarily the behavior of large patent aggregators, rather than small inventors. NPE patent trolling has a real negative impact on targeted firms, without any increase in innovation, technology transfer, or other counterbalancing benefits measured thus far.

Citation: Cohen, Lauren and Gurun, Umit G. and Kominers, Scott Duke, Empirical Evidence on the Behavior and Impact of Patent Trolls: A Survey (December 25, 2015).

Full text on SSRN: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2708224