Patent holding company
Encyclopedia
Patent holding companies are companies
set up to administer, consolidate and license patent
s or otherwise enforce patent rights, such as through litigation. Some patent holding companies have been characterized pejoratively as patent troll
s due to aggressive enforcement of their patent rights through litigation.
may have many separate divisions in different countries, or within the same country. If a patent is granted in the United States
to a European-based arm of a multinational company, the U.S. arm of that same company cannot make use of the invention in the U.S. without infringing the patent
. It is also legally dangerous to ignore any infringement of a patent even if that infringement is by an associate company since it might create a legal assumption that you are not intending to defend your patent rights.
Consequently, many multinationals set up a patent holding company in a tax-favourable country or U.S. state (e.g. Switzerland
or Delaware
) and then sell (i.e. transfer
or assign) all of the patent rights for the company as a whole to that patent holding company. The patent holding company can then focus on the task of granting licences to the different divisions of the multi-national as well as to third parties.
(Examples include Kootol;NTP, Inc.; Townshend Intellectual Property, LLC and many others).
Company
A company is a form of business organization. It is an association or collection of individual real persons and/or other companies, who each provide some form of capital. This group has a common purpose or focus and an aim of gaining profits. This collection, group or association of persons can be...
set up to administer, consolidate and license 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 or otherwise enforce patent rights, such as through litigation. Some patent holding companies have been characterized pejoratively as patent troll
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...
s due to aggressive enforcement of their patent rights through litigation.
Large companies
Large, multinational companiesMultinational corporation
A multi national corporation or enterprise , is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation...
may have many separate divisions in different countries, or within the same country. If a patent is granted in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
to a European-based arm of a multinational company, the U.S. arm of that same company cannot make use of the invention in the U.S. without infringing the patent
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...
. It is also legally dangerous to ignore any infringement of a patent even if that infringement is by an associate company since it might create a legal assumption that you are not intending to defend your patent rights.
Consequently, many multinationals set up a patent holding company in a tax-favourable country or U.S. state (e.g. Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....
or Delaware
Delaware
Delaware is a U.S. state located on the Atlantic Coast in the Mid-Atlantic region of the United States. It is bordered to the south and west by Maryland, and to the north by Pennsylvania...
) and then sell (i.e. transfer
Transfer (patent)
As objects of intellectual property or intangible assets, patents and patent applications may be transferred. A transfer of patent or patent application can be the result of a financial transaction, such as an assignment, a merger, a takeover or a demerger, or the result of an operation of law,...
or assign) all of the patent rights for the company as a whole to that patent holding company. The patent holding company can then focus on the task of granting licences to the different divisions of the multi-national as well as to third parties.
Small companies
Similarly, it is not uncommon for numerous small companies to band together to consolidate their patents in order to better compete with a larger company. If these numerous small companies are potentially competitors, they may not trust each other to maintain independent ownership of the various patents. One solution is to set up a new patent holding company which can be jointly managed.Inventors
Similarly, it is common for independent inventors with valuable technology patents to set up a technology-licensing company and to assign all the patents for their inventions to that company(Examples include Kootol;NTP, Inc.; Townshend Intellectual Property, LLC and many others).