Non-Practicing Entities: Enforcement Specialists?

Abstract

We examine whether non-practicing entities (NPEs) have a superior ability to pursue patent lawsuits. We develop a theoretical model that predicts that cases with superior abled patentees resolve faster than cases with opponents of equal ability. Our empirical analysis of a sample of US patent litigation cases shows this duration pattern for NPE cases. The result is robust to controlling for patent and court characteristics but also for an important feature of NPE cases, a lack of product market interaction with the potential infringers. Finally, we observe, in line with our theory, a similar duration pattern for large firm patentees; firms with access to a similar legal expertise.

Keywords: non-practicing entities, litigation, patents, market for patents

JEL Classification: K0, K41, O34