Episode 17: Invalidity Assertion Entities and their Effect on the Patent Landscape
This week, Online Editor Anthony Zangrillo is joined by Staff Member Matt Hershkowitz and Special Guest Mike Schuster, Assistant Professor at Oklahoma State University Spears School of Business.
The podcast tackles a recent entrant on the patent landscape: the Invalidity Assertion Entity (IAE). IAEs engage in rent-seeking by demanding payment from patent holders in exchange for not attempting to invalidate their patents through administrative action before the U.S. Patent and Trademark Office.
The response to IAEs has been uniformly negative. Reflexive Congressional proposals to terminate the IAE business model were not surprising. In contrast to the common response to IAEs, Mike discusses how profit-driven IAEs may effect socially beneficial externalities and why legislating to end the IAE business model is imprudent.
In fact, the IAE may discourage the much-maligned patent troll business model. IAEs are rent-seekers who demand consideration from patent owners in exchange for not attempting to invalidate their patents through an administrative action before the U.S. Patent and Trademark Office.
Self-interested IAEs will target patents and patent holders with attributes that maximize the likelihood the IAE will secure a lucrative settlement. Patent trolls exhibit these characteristics and will therefore be disproportionately targeted by IAEs. This practice raises costs and lowers income for patent trolls, which discourages future troll activity. IAEs thus — by pursuing their own profit-driven agendas — further the long-time policy goal of reducing patent troll lawsuits. This conclusion is diametrically opposed to the negative portrayals of IAEs in the media and recent legislative proposals to terminate the nascent business model.
Here is a link to 2 articles Mike has written on the topic:
Michigan Telecommunications and Technology Law Review, 2016
Wake Forest Law Review, Forthcoming
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