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These non-practicing entities (or NPEs) argue that this allows them to protect the rights of inventors who may not have the financial firepower to take on big firms.
But some NPEs are derided as "trolls" because their sole purpose seems to be to exploit the legal system by demanding licensing fees from companies, sometimes for questionable patents.
The most litigious NPEs file more than one lawsuit a week: one, Acacia Research, filed as many as 239 in 2013, according to RPX, a patent consultancy.
The paper's authors found that rather than acting as benevolent patent enforcers, NPEs simply target the firms with the most cash however good or bad their argument that a patent has been infringed is.
The rest goes to lawyers and NPEs that do not engage in innovation.In effect, this damages productivity by punishing innovators for their success.
And the largest NPEs are the worst offenders.
The authors collected a comprehensive dataset on NPEs, relevant patents and lawsuits between NPEs for the period 2001 and 2011.
For example, the probability of being sued by NPEs doubles after a firm experiences a sudden increase in its cash balance.
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In principle, Rockstar is a "non-practising entity" (NPE) – AKA a "patent troll" – since it doesn't make anything, just asserts rights over its patents.
But due to the strength of NPE lobbyists, no serious reforms are likely to be passed soon, says Mr Kominers.
Patent troll, also called nonpracticing entity or nonproducing entity (NPE), pejorative term for a company, found most often in the American information technology industry, that uses a portfolio of patents not to produce products but solely to collect licensing fees or settlements on patent infringement from other companies.
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