NPEs, trolls, and patent strategies

InfoWorld has a piece on "patent trolls" -- NPEs (non-practicing entities) . The name non-practicing entity implies that the entity does NOT practice the invention, but InfoWorld writes: As the name implies, NPEs do no research and hold no patents of their own making. Thus, universities are not NPEs in this definition , but then neither was NTP of the NTP v. RIM (BlackBerry), or Eolas.


From InfoWorld: As the name implies, NPEs do no research and hold no patents of their own making. Their sole purpose is to snap up patents -- often from companies forced to liquidate their assets -- and look for products that might infringe on those patents they now hold.

But observe also:

RPX does no research and holds no patents of its own making. Its sole purpose is to snap up patents -- often from companies forced to liquidate their assets -- and look for products that might infringe on those patents they now hold.

InfoWorld: Once a product is targeted, the NPE sends a letter to the product's maker, threatening to sue the supposedly infringing company unless it pays a license fee or settles out of court.

In many cases, it is cheaper for a large company to settle even if the case has very little merit, as legal defense could cost millions.

But observe: it is cheaper for a large company to take a license from RPX even if the litigation threat is small, as legal defense could cost millions.