Edison in the Boardroom Revisited: How Leading Companies Realize Value from Their Intellectual Property, Second Edition

Appendix B

The Rise of Patent Aggregators

Kent Richardson and Erik Oliver

It is important to have a common terminology for this discussion. The following terms are provided for your reference.

Terminology

Nonpracticing entity (NPE)—an entity—for example, a company, partnership, non-profit, government agency, or limited liability corporation (LLC)—that holds patents for which the entity does not currently produce a product, or have plans to do so, embodying the patented inventions. There are many different kinds of NPEs with many different business models. Examples include universities, LLCs set up to litigate a select group of patents, and corporations whose stated goal is to help inventors monetize their patents through assertion (e.g., Acacia Research Corporation [NASDAQ: ACTG]).

Patent aggregator—an entity whose primary business function is to buy patents outright or purchase licenses to patents. Examples include Intellectual Ventures (IV), Rational Patent Exchange (RPX), and Acacia.

Patent assertion entity (PAE)—a new term recently coined by the Federal Trade Commission (FTC) in their March 2011 report on the evolving IP marketplace,1 a PAE “refer(s) to firms whose business model primarily focuses on purchasing and asserting patents.” One way to contrast PAEs with NPEs is that NPEs may have technology development and deployment as a significant component of their business models even though NPEs may not ultimately practice the patented technology. Examples include Acacia and ...