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.
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:
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.
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.
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:
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.
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.
Patent pools, also known as patent licensing platforms, are a group of companies who pool their patents for a particular technology or standard. The pool administrator licenses the combined portfolios as a single package. Patent pools provide easier access to key patents for smaller players, facilitate knowledge sharing between companies in the same industry, and reduce the risk of infringement.
Prominent NPEs that are active in patent pools include:
Sisvel operates patent pools and joint licensing programmes in the fields of mobile communication, wireless local area networking, video coding, digital video broadcasting, recommendation engines and broadband access to data networks.
As of 2022, Avanci has a consortium of 49 patent owners in its marketplace licensing their eCall, 2G, 3G, and 4G standard essential patent portfolios. Avanci gives you a one-stop licence to essential patented technology that’s required for wireless connected devices.
NPEs can aggregate patents in an offensive or defensive manner to extract value from IP. Some of them have sizeable portfolios.
After a set of patents has been aggregated or a patent portfolio for a particular technology has been created, the next step is seeking the right licensing contracts. Another option is to sell patents from a patent pool to businesses. The R & D investment patterns, patent portfolios and patenting trends of companies should be studied to decide which parties could be the most interested in licensing IP.
NPEs should buy patents that are easy to license or sell. The legal, competitive, market and technological potential of a patent family needs to be assessed before a decision is made.
It requires extensive due diligence and background research for the technology and products against which the patents are being compared. Analysing the interconnections with the standards that may exist and their Standard Essential Patents (SEPs) is necessary to evaluate whether the patent can be considered as a standard or not.
NPEs primarily enforce patents through licensing or litigation. Read our latest blog for insights into NPE types, key patent activities, and prominent entities with substantial patent portfolios.
