Defensive patent aggregation
Encyclopedia
A defensive patent aggregation (DPA) is the purchasing of patent
s or patent rights to keep such patents out of the hands of entities that would assert them against operating companies. The opposite is offensive patent aggregation (OPA) which is the purchasing of patent
s in order to assert them against companies that would use the invention
s protected by such patents (operating companies) and to grant licenses to these operating companies in return for licensing fees
or royalties
. OPA can be practiced by operating companies or Non-Practicing Entities
(NPEs)
Operating companies must often defend themselves against claims of patent infringement
. To prevent such litigations, operating companies sometimes purchase patents in technologies which they use or develop. Another motivation for operating companies to acquire patents is the ability to counter-assert such patents in case another operating company files a patent litigation. Operating companies have also pooled their efforts and financial resources to purchase patents. An example of such defensive patent aggregation is Allied Security Trust
(AST).
In 2008, a new business model emerged with third-party financing doing defensive patent aggregation whereby a third-party – the aggregator – purchases the patents or patent rights strictly to mitigate the risk and cost of litigation associated with non-practising entities
(NPEs) and provides licenses to members against a fixed annual membership fee. This model was introduced by RPX Corporation
, a start-up based in San Francisco. RPX received venture funding from Kleiner Perkins Caufield & Byers (KPCB) and Charles River Ventures (CRV).
In the first 10 months of 2008, more than 2,300 patent lawsuits were filed the United States. The majority of these cases are filed by the companies that created the patented invention. But a growing share of the lawsuits is coming from non-practicing entities (NPEs) – also called patent trolls – which acquire patents for the sole purpose of licensing and asserting their patent rights. In fact, NPE litigation grew from 2.6 percent of filed cases in 2000 to 16.6 percent of filed cases in 2007. And unlike product companies, known as operating companies in the IP commerce world, NPEs are not susceptible to counter-assertion by their licensing targets because they do not make or sell any products or services.
The NPE offense includes single inventor assertion firms, patent licensing and enforcement companies, litigation financiers and investors, and patent aggregators, both institutional and strategic. However, NPE offense is ultimately concentrated on asserting patents to the detriment of operating companies. NPE defense methods include defensive patent aggregation from companies including RPX Corporation
, cooperative purchasing efforts, such as defensive patent pool
s and buying consortia, from companies including Allied Security Trust, outright purchasing of patents, settlement and litigation.
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
s or patent rights to keep such patents out of the hands of entities that would assert them against operating companies. The opposite is offensive patent aggregation (OPA) which is the purchasing of patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
s in order to assert them against companies that would use the invention
Invention
An invention is a novel composition, device, or process. An invention may be derived from a pre-existing model or idea, or it could be independently conceived, in which case it may be a radical breakthrough. In addition, there is cultural invention, which is an innovative set of useful social...
s protected by such patents (operating companies) and to grant licenses to these operating companies in return for licensing fees
License
The verb license or grant licence means to give permission. The noun license or licence refers to that permission as well as to the document recording that permission.A license may be granted by a party to another party as an element of an agreement...
or royalties
Royalties
Royalties are usage-based payments made by one party to another for the right to ongoing use of an asset, sometimes an intellectual property...
. OPA can be practiced by operating companies or Non-Practicing Entities
Patent troll
Patent troll is a pejorative but questioned term used for a person or company who is a non-practicing inventor, and buys and enforces patents against one or more alleged infringers in a manner considered by the target or observers as unduly aggressive or opportunistic, often with no intention to...
(NPEs)
Operating companies must often defend themselves against claims of patent infringement
Patent infringement
Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or...
. To prevent such litigations, operating companies sometimes purchase patents in technologies which they use or develop. Another motivation for operating companies to acquire patents is the ability to counter-assert such patents in case another operating company files a patent litigation. Operating companies have also pooled their efforts and financial resources to purchase patents. An example of such defensive patent aggregation is Allied Security Trust
Allied Security Trust
Allied Security Trust is a member based patent holding company that helps protect members from patent infringement lawsuits by non-practicing entities.-Business:...
(AST).
In 2008, a new business model emerged with third-party financing doing defensive patent aggregation whereby a third-party – the aggregator – purchases the patents or patent rights strictly to mitigate the risk and cost of litigation associated with non-practising entities
Patent troll
Patent troll is a pejorative but questioned term used for a person or company who is a non-practicing inventor, and buys and enforces patents against one or more alleged infringers in a manner considered by the target or observers as unduly aggressive or opportunistic, often with no intention to...
(NPEs) and provides licenses to members against a fixed annual membership fee. This model was introduced by RPX Corporation
RPX corporation
RPX Corporation is a provider of patent risk management solutions, offering defensive buying, acquisition syndication, patent intelligence and advisory services. Since the company was founded in March, 2008, RPX claims to have introduced efficiency to the patent market by providing a rational...
, a start-up based in San Francisco. RPX received venture funding from Kleiner Perkins Caufield & Byers (KPCB) and Charles River Ventures (CRV).
Rationale
In the United States, the cost of defending against a patent infringement suit, as of 2004, is typically $1 million or more before trial, and $4 million or more for a complete defense, even if successful. And, when non-litigation licensing and settlements are factored in, the actual costs of fighting patent lawsuits is much higher. Because the costs and risks are high, defendants may settle even non-meritorious suits they consider frivolous for several hundred thousand dollars. The uncertainty and unpredictability of the outcome of jury trials also encourages settlement.In the first 10 months of 2008, more than 2,300 patent lawsuits were filed the United States. The majority of these cases are filed by the companies that created the patented invention. But a growing share of the lawsuits is coming from non-practicing entities (NPEs) – also called patent trolls – which acquire patents for the sole purpose of licensing and asserting their patent rights. In fact, NPE litigation grew from 2.6 percent of filed cases in 2000 to 16.6 percent of filed cases in 2007. And unlike product companies, known as operating companies in the IP commerce world, NPEs are not susceptible to counter-assertion by their licensing targets because they do not make or sell any products or services.
The NPE offense includes single inventor assertion firms, patent licensing and enforcement companies, litigation financiers and investors, and patent aggregators, both institutional and strategic. However, NPE offense is ultimately concentrated on asserting patents to the detriment of operating companies. NPE defense methods include defensive patent aggregation from companies including RPX Corporation
RPX corporation
RPX Corporation is a provider of patent risk management solutions, offering defensive buying, acquisition syndication, patent intelligence and advisory services. Since the company was founded in March, 2008, RPX claims to have introduced efficiency to the patent market by providing a rational...
, cooperative purchasing efforts, such as defensive patent pool
Patent pool
In patent law, a patent pool is a consortium of at least two companies agreeing to cross-license patents relating to a particular technology. The creation of a patent pool can save patentees and licensees time and money, and, in case of blocking patents, it may also be the only reasonable method...
s and buying consortia, from companies including Allied Security Trust, outright purchasing of patents, settlement and litigation.
See also
- Allied Security TrustAllied Security TrustAllied Security Trust is a member based patent holding company that helps protect members from patent infringement lawsuits by non-practicing entities.-Business:...
- Intellectual VenturesIntellectual VenturesIntellectual Ventures is a private company notable for being one of the top-five owners of U.S. patents, as of 2011. Its business model has a focus on developing a large patent portfolio and licensing these patents to companies. Publicly, it states that a major goal is to assist small inventors...
- PatentFreedomPatentFreedomPatentFreedom LLC is an on-line community of companies that share information about non-practicing entities that own and enforce patents primarily to collect license fees. Membership is restricted to companies that have more than $100 million in sales per year, exclusive of any income they...
- Patent trollPatent trollPatent troll is a pejorative but questioned term used for a person or company who is a non-practicing inventor, and buys and enforces patents against one or more alleged infringers in a manner considered by the target or observers as unduly aggressive or opportunistic, often with no intention to...