This paper addresses the problems of aggressive rent-seeking activities by patent assertion entities (PAEs) and privateers. Section II explains why aggressive patent assertion is especially problematic in patent thick products and systems (such as computers, smartphones and software), and why technological developments have increased the number and “density” of patent thickets. Section III addresses the fundamental differences in the strategic positions and interests of practicing entities and PAEs, and explains why those differences affect the conduct of PAEs and increase the opportunities for, and economic harm caused by, their rent-seeking conduct and efforts to engage in patent hold-up. Section IV reviews recent empirical studies regarding the assertion activities of PAEs, which, by any measure, are growing dramatically. Section V identifies the types of economic harm caused by PAEs and explains how PAEs exploit deficiencies in patent policy and enforcement, including the granting of injunctions (or exclusion orders), excessive patent infringement damage awards, and costly settlements stemming from excessive actual or threatened litigation. Section V also reviews recent empirical research that attempts to distinguish the patent enforcement conduct and outcomes of PEs from those of PAEs and/or measure the effects of PAEs’ patent assertion activities. Finally, Section VI addresses the rapidly growing threat to competition and innovation caused by the transfer of patents from practicing entities to PAEs. This conduct has been referred to in the literature as “privateering.” While there may be limits on the use of antitrust or competition policy tools to moderate all of the harms caused by PAEs, cases involving privateering are ripe for investigation, prosecution and remedy by competition policy enforcement agencies and private antitrust actions.
- PAEs Privateers
Available at: http://works.bepress.com/robert_g_harris/7/