On Mass Patent Aggregators

By: David L. Schwartz

 

Response to: Mark A. Lemley & A. Douglas Melamed, Missing the Forest for the Trolls, 113 Colum. L. Rev. 2117 (2013).

 

The debate about patent trolls is everywhere. From the op-ed pages of The Wall Street Journal and The New York Times to President Obama’s Council of Economic Advisors to Judge Richard Posner, the nearly unanimous view appears to be that patent “trolls” are evil. The argument is that since patent trolls do not manufacture any products, they are merely siphoning money from the “true” innovative firms, the manufacturers. This argument is exaggerated and overly simplistic. If the failure to manufacture products is the problem, it is curious that almost none of the proposed changes to the patent system require manufacture. While there are patent holders who abuse and exploit the patent litigation system, there also are patent holders with meritorious claims who have been unfairly denied compensation. This is true for companies that both do and do not manufacture. The critics also lump together a wide variety of seemingly different actors, including individual inventors, failed startups, research and development companies, mass patent aggregators, and Wall Street speculators who buy a single patent for purposes of enforcement. The correct analysis of the costs and benefits of patent trolls is quite complicated, and far beyond the simple narrative based upon whether the owner of the patent manufactures products.

 

Lemley and Melamed’s Article, Missing the Forest for the Trolls, provides a refreshingly balanced and nuanced view of what Lemley and Melamed refer to as “patent trolls.” With respect to the label, instead of “patent troll,” this Essay uses the more neutral term “non-practicing entity,” or “NPE” for short. In Lemley and Melamed’s measured Article, they situate NPEs and aggregators within a sophisticated view of the patent litigation system. They even proceed to defend, at least partially, mass patent aggregators, a type of NPE that is almost universally vilified in the press. However, Lemley and Melamed omit many complexities that surround the acquisition and enforcement of patents by mass patent aggregators. Some of these complexities cut in favor of Lemley and Melamed’s conclusions, but others do not. These complexities should be taken into account in any assessment of whether aggregators do more social and economic harm than good.

 

This Essay first highlights and underscores several of Lemley and Melamed’s points. Then, Part II explains unappreciated complexities relating to mass patent aggregators, including both positive and negative contributions. Finally, Part III offers a broad view of the recent focus on increased enforcement of patents.

 

Download (PDF, 373KB)