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- Title
PATENT ALLIANCE: DEFENSIVE AGGREGATION--THE MARKET SOLUTION TO NON-PRACTICING ENTITIES?
- Authors
QIONG QI
- Abstract
In recent times, patent litigation involving Non-Practicing Entities ("NPEs") has increased drastically over the last decade, at an average rate of 24% per annum. Patent Assertion Entities ("PAEs"), a subcategory of NPEs. are responsible for approximately one-fifth of the total patent suits in federal courts with films accruing around S29 billion of direct costs due to these assertions of patent rights. NPE assertions have become such a critical problem that even United States President Barack Obama mentioned them in his State of the Union address. Although legislative reform is a widely recognized solution to NPE patent assertion problems. Congress has been notoriously slow to act in the area of patent reform. Consequently, industries have looked to potentially quicker solutions, such as the formation of patent alliances that aggregate patent rights for their members' use but do not offensively assert the acquired patents against third parties. Such alliances, however, pose their own unique challenges in creating an efficient defense against NPE patent assertions. This article examines the business models of two established Patent Alliances. AST and RPX: both endorse the non-assertion philosophy yet use different business models to achieve their defensive goals. This article contends that operation under a principle of non-assertion serves as a major source of economic inefficiencies in the alliances, resulting in higher licensing costs for practicing entities, as well as a potential hotbed for antitrust violations. This article asserts that upon modifications to AST's and RPX's current business models, efficiency can be improved. Nevertheless, these patent alliances still have highly questionable, long-term viability because of the impracticality in their preemptive purchasing strategy and the difficulty in managing a large member pool to support this strategy. In addition, without reassessing the 11011-assertion goals, and modifying current practices implementing such goals, even the modifications proposed to strengthen patent alliances may ultimately prove an ephemeral solution to the problem.
- Subjects
NONPRACTICING entities (Patent law); ANTITRUST law; BUSINESS models
- Publication
IDEA: The Intellectual Property Law Review, 2017, Vol 57, Issue 1, p71
- ISSN
0019-1272
- Publication type
Article