There are different types of NPE. Individual inventors in universities and research institute are technically NPEs. These groups of inventors may not pursue the manufacturing and sales of their inventions because of a myriad of reason. Instead, they may license their inventions to others for commercialization or they may choose to sell the patents outright. This is different from start-up companies that have attempted to commercialize their patented technologies. The term NPE is also often used to refer to both small IP holding companies and larger IP aggregators who purchase portfolios of patents from inventors and others for the purpose of monetization. Unlike the universities or research institutes, these NPEs mainly purchase patents of others and enforce those rights as their main business plan or means of revenue. Some NPEs are also referred to as “Patent Trolls”. This is a pejorative term often associated with NPEs which threaten litigation and extort settlements on the basis of weak patents in an opportunistic manner.
Established NPE business model varies in aspects such as size, organizational structures and means of generating revenue. In Chuang A, 2006, “Fixing the Failure of Software Patent Protection: Deterring Patent Trolling by Applying Industry-Specific Patentability Standards” paper, she highlighted five types of companies dominating the NPE scene. She broadly coined them as Trolling Buyer, Trolling Resurrecter, Trolling Developer, Trolling Agent and Trolling Lawyer. She has used the term “trolling” which is a dismissive reference to NPEs. Nevertheless, she has bought up the key essential of the differences between the entities in the NPE ecosystem. In the succeeding paragraph, I will elaborate these different entities in terms of their business and revenue model.
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Trolling Buyer
A Trolling Buyer company purchases old or unexploited patents from others and assert patent enforcement against an industry. These patents often still have unexploited commercial or technological value. Acacia Technologies Group (Acacia) can be classified as an example of the Trolling Buyer. Acacia’s business model is to acquire patents from its clients, license, and enforce patents. Their revenues are from licensing and aggressive patent enforcement. Intellectual Ventures (IV) is a variant of a typical Trolling Buyer company. IV, not only acquires patents, it also develops inventions. Its goal is to develop a large patent portfolio without producing or manufacturing any products.
Their revenues are generated by providing its clients with protection from lawsuits and also asserting its patents against its clients’ rivals. Another variant of a Trolling Buyer is RPX Corporation, who provides a service to its client by offering “defensive” licenses that eliminate the threat of being sued on those patents. RPX actively seeks to acquire patents that are being asserted in litigation or patents of high value that could be used offensively against members of their client network. This provides their members with a strong incentive to license the RPX portfolio as a form of insurance against any claims.
Trolling Resurrecter
A Trolling Resurrecter is a company that relinquished its core business (either completely or largely) in manufacturing and sales of its products to focus only on patent licensing. The bulk of revenue is generated not from the company’s products but from licensing of its own patented technologies. Ampex Corporation is such a company focuses on potential income from patent licensing. Now, the company has several of its patents under license to manufacturers of professional and consumer electronic products.
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Trolling Developer
Unlike a Trolling Buyer company, the Trolling Developer develops inventions and patents. However, they do not produce and sell a product. Their revenues are generated from asserting companies that have infringed their patents. IV is a hybrid between Trolling Buyer and Trolling Developer.
Trolling Agent
A Trolling Agent company helps assert patents on behalf of their clients. They provide an advisory role to maximize its clients’ IP portfolio by commercializing their IP assets. This includes sale, licensing (including cross licensing) or brokerage of their clients’ patents. This could also include litigation management when necessary. The revenues generated are from the negotiating fees from the settlements and licenses capitalized for their client. IPValue Management, Inc. and ThinkFire Services USA, Ltd. are such examples of a Trolling Agent.
Trolling Lawyer
Similar to a Trolling Agent, a Trolling Lawyer, an attorney or a law firm, that asserts its client’s patents against other companies and generates its revenue by taking a percentage of income from the licensing agreements or settlements. The Trolling Lawyer is akin to a specialized Trolling Agent.
To sum up, these five companies’ business model uses patents, directly or indirectly, to enforce or assert them broadly across an industry as a mean of generating revenue. Broadly, the IP transaction provided by some of these companies includes Patent Brokerage, Patent Licensing and even Litigation Management.
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[ 1 ]. Chuang A, 2006. Fixing the Failure of Software Patent Protection: Deterring Patent Trolling by Applying Industry-Specific Patentability Standards. Southern California Interdisciplinary Law Journal, Vol. 16, pp. 215-251. [ 2 ]. About us, Acacia Technologies Group, http://www.acaciatechnologies.com/aboutus_main.htm [ 3 ]. About us, Intellectual Ventures, http://www.intellectualventures.com/index.php/about [ 4 ]. Defensive Patent Aggregation Service, RPX, http://www.rpxcorp.com/index.cfm?pageid=19 [ 5 ]. Corporate Background, Ampex Corporation, http://www.ampex.com/ampex-companies/corporate-info.html [ 6 ]. IPVAlue Management Inc., http://www.ipvalue.com/company/ [ 7 ]. ThinkFire Services USA, Ltd., http://www.thinkfire.com/company/
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