What if Non-Practicing Entities (NPEs) are using patents the way patents are meant to be used?  I know this is a provocative question, but I’ve given this issue some thought, and I think that this is a question worth exploring.

Let me start by saying, I am not for bogus patent law suits.  A company should never sue another company using bogus patent threats.  But if a company does infringe an existing patent, should it matter who owns the patent?

There aren’t many fans of NPEs, hence the nickname, ‘Patent Trolls’.  People don’t like the idea that a patent owner that doesn’t make the patented invention has the right to sue a company that does make a product that might be embodying the patented invention.  The primary argument against NPEs is the notion that the purpose of the patent system is ‘to promote the useful arts and sciences’ (as stated in the US Constitution) and increase innovation.  Increased innovation means a better society.  Patent trolls stifle innovation when they bring law suits against ‘real’ businesses because the money that would otherwise be spent on innovation goes to the lawsuit, damages, and/or licensing fees.

To some degree that argument is correct.  Innovation is stifled when patents are used to exclude other companies from practicing the patented invention.  But then again, isn’t that the purpose of the patent?  There is a difference between the long-term purpose of the patent system (further innovation and society) and the short-term purpose of the patent.  The US Government gives patent owners the right to exclude others from making, using, or selling the patented invention for the life of the patent.  Well, how does one exclude others?  The patent owner sues a suspected infringer for patent infringement.  If the patent owner doesn’t want to fully-exclude others, he can seek a license or give away his patent rights, e.g. open source software.  Alternatively, a patent owner could do nothing about patent infringement.  Ultimately, it is up to the patent owner to decide what he, she, or it wants to do with their business asset.

In the short term, patents are designed to give a patent owner (inventor, corporate entity, or troll) a 20 year monopoly in the patented invention.  There is little restriction on who can by or sell a patent.  There is no requirement that the patent owner has to make, use, or sell a product embodying the patented invention in the United States.  So, should it matter whether the entity doing the excluding is an NPE or a Practicing Entity?

NPEs aren’t cheating the system.  Nothing they’re doing is illegal per se.  (Again, I would never support any one bringing bogus patent suits.)  I think a lot of people are uncomfortable with the idea of companies that use patents to do nothing but sue companies for profit.  It creates an unlevel playing field, and that is scary, but not necessarily wrong.

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