68 Pages Posted: 16 Jan 2007
The current patent system is argued to be in a state of crisis. Although much recent criticism about the patent system has been leveled at so-called "patent trolls," another trend has emerged that may prove more enduring and potentially more troublesome. Patent holders have developed more systematized and strategic methods to obtain revenues from the patent system, building business plans around leveraging monetary value from what are called "liquid patents" herein. Recognizing that the patent right can be monetized into licensing fees and damages in an action for patent infringement, some entities have undertaken formalized programs to gather or acquire critical patents in particular fields. These practices are supported by patent rules of law but are in contravention of the larger goals of the patent system. This work traces certain attributes that encourage liquid patent holder's strategies. Further, the paper proposes that the remedies provisions of the patent system should be modified to ensure that this practice does not harm innovation. In addition, the traditional antitrust protections for patent holders should be eliminated to prevent abuse and curb liquid patent holder's ability to block subsequent invention, innovation and the commercialization of ideas.
Keywords: patent, technology, market, auction
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