67 Pages Posted: 9 Sep 2016 Last revised: 22 Jul 2017
Date Written: September 7, 2016
Over the last decade, much of the patent law literature has focused on the problem of “patent trolls,” or patent owners who don’t make products, but sue others that do. The basic complaint against these types of entities is that they impose a tax on innovation without providing offsetting societal benefits. Furthermore, their patent assertions have been on the rise, with a significant percentage of patent suits now attributable to them. In short, the troll phenomenon suggests a problem of excessive patent assertions.
But despite the importance of the troll phenomenon, the fact remains that most patents are never asserted, or are asserted less than they could be. Under-assertion of patents thus appears to be more prevalent than over-assertion. Yet, beyond noting a set of generic economic considerations that may lead to this outcome, the literature fails to provide systematic, industry-specific assessments of why patent owners choose to forego asserting their rights in so many cases. And the generic nature of these assessments is particularly problematic given that patents play significantly different roles from one industry to the next, as scholars have noted for some time.
This Article addresses these issues by providing an industry-specific, informal model for theorizing why patent owners forego asserting their rights in so many cases (and why they may not in others). It briefly applies this model to four industries: software, pharmaceuticals, biotechnology, and semiconductors. The Article then explores some potential implications of this industry-specific model. In particular, this Article suggests that high barriers to patent assertion in an industry may, ironically, result in increased patent trolling in the industry. Hence, this Article provides guidance to policymakers by helping explain the rise of patent assertions in some industries, such as software, as well as helping to identify other industries, such as biotechnology, that may be increasingly at risk of patent trolling.
Keywords: Patents, Patent Trolls, Patent Assertion Entities, Non-Practicing Entities, Software, Biotechnology, Semiconductors, Pharmaceuticals, Patent Litigation, Patent Assertion
Suggested Citation: Suggested Citation