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Are patent damages really what they seem?

Intellectual Property Magazine Christopher J. Fahy

Following is an excerpt:

The many forms of litigation
Patent litigation comes in a number of different forms: ‘traditional’ litigation between competitors practising their patents, such as the recent smartphone litigation between Apple and Google; litigation brought by non-practising entities (NPEs); and cases filed by hybrids - companies that may have practised the asserted patents at one time but are no longer doing so, instead bringing suit to monetise their patent portfolios. With the increase in the number of NPEs and the controversy surrounding the morality associated with a patent system that allows such litigation, patent litigation today is a hot topic and has entered the public’s lexicon.

Non-practising entities
One area given significant attention in the PwC report is NPEs. Over time, NPEs have evolved from the likes of the individual inventor who obtains patents, files lawsuits and collects millions of dollars in settlements and licenses. In more recent times, entire companies, sometimes even publicly traded ones, have emerged whose business model is to purchase patents and enforce them without practising the patents themselves.

Much has been written about the debate surrounding the affect NPEs have on the US patent system and whether there is a need for reform. In fact, President Barack Obama specifically referenced NPEs when he announced various legislative recommendations and executive actions less than a year after signing a sweeping patent reform law in September 2012.7 Indeed, certain provisions of the 2012 America Invents Act were designed to combat the perceived growing NPE problem.