CIFRA: Challenging the ICT Patent Framework for Responsible Innovation. D4.3: Paper to well-recognized journals

The European Commission. CIFRA: Challenging the ICT Patent Framework for Responsible Innovation. Grant Agreement No.731940. Research and Innovation Action. Call: H2020-ICT-35-201

FRAND Market Failure: IPXI’s Standards-Essential Patent License Exchange

This case study pertains to Intellectual Property Exchange International, Inc. (IPXI), which was formed in 2008 to create a market-based trading exchange for aggregated patent license rights, particularly standards-essential patents (SEPs). IPXI based its model on existing commodities exchanges, proposing that non-exclusive patent licenses could be standardized, commoditized, and traded on an open market, thus eliminating costly and inefficient bilateral negotiations and providing a royalty rate likely to be viewed as “reasonable”. IPXI’s most ambitious offering involved a portfolio of 194 U.S., European and other patents deemed essential to IEEE’s 802.11n “Wi-Fi” standard. IPXI offered up to 50,000 tradable Unit License Right contracts (ULRs), each granting the holder a worldwide right to manufacture and sell 1,000 compliant devices. Despite the backing of several significant patent holders, IPXI’s offering failed to attract sufficient interest, and IPXI ceased operations in March 2015. This paper analyzes the failure of IPXI based on the documentary record, public statements by IPXI executives and interviews with industry experts. It concludes that, despite its potential to improve the efficiency of the SEP licensing market, factors including a lack of participation by key patent holders, an untested record of enforcing patents against infringers, and constraints imposed by the standardized ULR, led to IPXI’s demise

Innovation, Intellectual Property Rights and Non-Practicing Entities in the European Patent Market

I brevetti sono una forma di diritti di proprietà intellettuale particolarmente rilevante per promuovere attività innovative. Un brevetto concede al suo proprietario un temporaneo diritto esclusivo su invenzioni che sono nuove, comportano un passo inventivo e sono suscettibili di applicazione industriale. Con questo diritto, gli inventori possono proteggere le loro idee dall'imitazione e ottenere un ritorno economico dai loro investimenti in ricerca e sviluppo (R&S). Tuttavia, l'uso dei brevetti ha subito una significativa trasformazione, estendendosi oltre lo scopo tradizionale di ricompensare gli sforzi innovativi. In particolare, nel campo delle Tecnologie dell'Informazione e della Comunicazione (ICT), i brevetti sono sempre più utilizzati come strumenti strategici (Blind, 2021). In particolare negli ultimi trent’anni, l'impressionante aumento del numero di brevetti concessi e l’emergere di un vero e proprio mercato dei brevetti hanno creato le condizioni per lo sviluppo di nuovi intermediari nel mercato delle tecnologie (Hagiu e Yoffie, 2013). Le "non-practicing entities"—aziende che non utilizzano i loro brevetti in senso tradizionale, ma si dedicano principalmente alla concessione di licenze e al ricorso al contenzioso legale—sono così emerse come attori di spicco nel mercato dei brevetti (Golden, 2007; Feldman ed Ewing, 2012). Comunemente definite anche "patent assertion entities" (PAE), e talvolta in modo dispregiativo "patent trolls," le NPEs hanno fortemente polarizzato il dibattito accademico e politico. A causa del loro status di entità non produttiva, le NPEs vantano vantaggi specifici rispetto alle entità che al contrario implementano direttamente nei loro prodotti le tecnologie di cui sono proprietarie. Per esempio, le NPEs sono tipicamente al riparo da contro-ingiunzioni per violazione del diritto di proprietà intellettuale e per questo sono state accusate di mettere in pratica strategie di "patent hold-up" (Lemley e Shapiro, 2007), che alcuni sostengono impongano una "tassa sull'innovazione" con effetti negativi sull'innovazione futura (Chien, 2008). Mentre le NPEs sono state ampiamente analizzate nel mercato dei brevetti degli Stati Uniti fin dalla loro comparsa all'inizio degli anni 2000 (Mezzanotti, 2021; Lemley e Zyontz, 2021), è solo di recente che i ricercatori hanno iniziato a studiare la loro presenza nel mercato tecnologico europeo (Fusco, 2013; Love, 2013; Leiponen e Delcamp, 2019). Questa tesi si propone esainare nel dettaglio il fenomeno delle NPEs nel mercato europeo dei brevetti. Il primo capitolo della tesi analizza la letteratura sui modelli di business delle NPEs, adottando un innovativo approccio bibliometrico per un esame sistematico della letteratura esistente guidato dal protocollo PRISMA (Preferred Reporting Items for Systematic Review and Meta-Analysis). Successivamente ad un’analisi critica della letterature rilevante vengono presentati tre casi studio sui modelli di business delle NPEs. Nel secondo capitolo, la presenza delle NPEs nel mercato europeo dei brevetti viene empiricamente analizzata attraverso un nuovo dataset di depositi e acquisizioni di brevetti da parte delle NPEs presso l'Ufficio Europeo dei Brevetti (EPO). In questo capitolo viene inoltre sviluppata una nuova tassonomia, che classifica le NPEs in tre modelli di business: "Litigation," "Portfolio" e "Technology" NPEs. Infine, il terzo capitolo esplora empiricamente l'interazione tra le caratteristiche qualitative del brevetto litigato e la propensione delle NPEs a scegliere giurisdizioni europee specifiche in cui avviare contenziosi (“forum shopping”).Patents are a form of intellectual property rights (IPRs) that are particularly relevant to promoting innovative activities. A patent grants to its owner a temporary exclusive right over inventions that are new, involve an inventive step and are susceptible of industrial application. Relying on this right, inventors can protect their ideas from imitation and gain an economic return from their past investments in research and development (R&D). However, the use of patents has undergone a significant transformation, extending beyond the traditional purpose of rewarding innovative efforts. Especially in the field of Information and Communication Technology (ICT), patents are increasingly used as strategic tools (Blind, 2021). Moreover, over the past three decades, the sharp increase in the number of granted patents and the unprecedented flourishing of patent trading have paved the way for new intermediaries in the market for technology (Hagiu and Yoffie, 2013). Non-practicing entities (NPEs)—firms that do not use their patents in a traditional manufacturing sense, but primarily engage in licensing and enforcement—have emerged as prominent actors on the patent market (Golden, 2007; Feldman and Ewing, 2012). Also referred to as Patent Assertion Entities (PAEs), sometimes pejoratively called "patent trolls," NPEs have greatly polarized the academic and policy debate. Due to their non-manufacturing status, NPEs have unique advantages over operating companies. They are typically shielded from patent infringement counter-claims and have recently faced allegations of employing patent "hold-up" strategies (Lemley and Shapiro, 2007), which some argue it imposes a significant "tax on innovation" with potential negative effects on subsequent innovation (Chien, 2008). While NPEs have been extensively analyzed in the US patent market since their emergence in the early 2000s (Mezzanotti, 2021; Lemley and Zyontz, 2021), it is only recently that researchers have started to investigate their presence in the European technology market (Fusco, 2013; Love, 2013; Leiponen and Delcamp, 2019). This thesis aims to address these research gaps by examining the NPE phenomenon in the European patent marketplace. First, we extensively explore and analyze the literature on NPE business models by adopting a novel bibliometric approach guided by the Preferred Reporting Items for Systematic Review and Meta-Analysis (PRISMA) protocol for systematic literature reviews. In addition, we will integrate three relevant NPE business models case studies. Second, we empirically investigate the presence of NPEs in the European patent market through a brand-new dataset of NPE patent filings and acquisitions at the European Patent Office (EPO). Furthermore, we develop an original taxonomy, thus categorizing NPEs into three business models: "Litigation," "Portfolio" and "Technology" NPEs. Finally, we empirically explore the interplay between the quality characteristics of the asserted patent and the propensity of NPEs to choose specific European jurisdictions where to initiate litigation (forum shopping)

Exploring the Boundaries of Patent Commercialization Models via Litigation

This thesis explores direct patent commercialization via patent assertion, particularly patent infringement litigation, a complex nonmarket activity whose successful undertaking requires knowledge, creativity, and financial resources, as well as a colorable infringement case. Despite these complexities, firms have increasingly employed patents as competitive tools via patent assertions, particularly in the United States. This thesis explores the business models that have been created to facilitate the direct monetization of patents. Since secrecy underpins the patent assertion strategies studied, the thesis is based on rich and enhanced secondary data. In particular, a data chaining technique has been developed to assemble relevant but disparate data into a larger coherent data set that is amenable to combination and pairing with other forms of relevant public data. This research has discovered that one particularly successful business model that employs a leveraging strategy, known as the non-practicing entity (“NPE”), has itself spawned at least two other business models, the highly capitalized “patent mass aggregator” and the “patent privateer.” The patent privateer, newly discovered in this research, is particularly interesting because it provides a way for firms to employ patents to attack competitors by forming specialized NPEs in a manner that essentially expands the boundaries of the firm. This research has also examined plaintiff firm management processes during litigations brought under leveraging and proprietary strategies, the two patent litigation strategies in which firms affirmatively initiate infringement litigations. In particular, this research investigates the commercial contexts that drive patent assertion strategies to explore the effective limits of the patent right in a litigation context. The investigation concludes that a variety of robust business models and management processes may be quite successful in extracting value from patents in the US

The Patent Medium: Toward a Network Paradigm of the Patent Medium

The modern patent system is conceived of as an information platform; it is evident in the common description of the patent system as a quid-pro-quo bargain: Society grants exclusive rights in exchange for information published by a patentee. But is there more to the patent system than merely informing others? Does the patent system also serve as a communication (and not only information) platform, namely, as a medium? Based on an interdisciplinary analysis of the patent system’s structure and features through the lenses of communication studies, this Article suggests that it does. It demonstrates how the patent system—as a medium—enables players to fulfill various communicative ends, much beyond the obvious goal of disseminating legal-technological knowledge. This Article strives to characterize the patent medium, as well as to examine the implications of portraying the patent space as a medium. Utilizing the power of communication analysis, this Article uncovers an existing, somewhat implicit communication paradigm of the patent system as a medium. Although tacit and unofficial, this paradigm is evident through a critical reading of patent scholarship and case law. This unspoken communication paradigm resembles that of a bulletin board: it is linear, straightforward, and focuses on the informative value of communication. However, this bulletin-board paradigm does not fully reflect the actual nature of the communication that transpires within the patent medium. After reexamining the patent space—the rules, structure, participants, and practices—this Article offers an alternative, more comprehensive paradigm of the patent medium—the network paradigm. A network, as opposed to a bulletin board, is a connected, multi-directional, and multi-player platform, which allows communication for various ends (including, but not limited to, informing). Instead of viewing the patent medium statically as a host of informative announcements, the network paradigm suggests a dynamic perspective, considering the patent medium to enable discourse. Beyond its theoretical contribution, the network paradigm serves as a powerful explanatory tool, offering profound implications for patent law. Specifically, the network paradigm resolves current oddities in the patent system; for instance, the network paradigm provides new understandings regarding phenomena in patent law such as patent pledging, early publication, and the first-to-file rule—incidents commonly considered enigmatic or only partially understood. As a tool with theoretical and practical-analytical value, the network paradigm helps both courts and commentators to theorize and rationalize patent law

“In The Public Interest”: University Technology Transfer and The Nine Points Document—An Empirical Assessment

In 2007, eleven major U.S. research universities and the Association of American Medical Colleges signed an accord titled In the Public Interest: Nine Points to Consider in Licensing University Technology. It outlined a range of issues that universities should consider when licensing their technology to the private sector—from reservations of rights and limitations on exclusivity to limiting dealings with patent assertion entities to making medical technologies accessible at affordable prices. More than talking points, the document proposed specific contractual clauses intended to promote the educational and public welfare missions of universities. Today, more than a hundred academic institutions and associations around the world have signed the Nine Points document. Yet in the fifteen years since the document was created, there has been no systematic, empirical assessment of its effect on university licensing practices. This Article fills that gap with the first empirical study of the impact of the Nine Points document on university licensing practices. Through a review of 220 publicly available university technology licenses signed both before and after the adoption of the Nine Points document, this Article finds that while the document prompted the expansion of educational and non-profit research using patented university technology, it resulted in few changes relating to the promotion of public health or access to medical technologies. This mixed adoption of the recommendations made by the Nine Points document suggests that there is little consensus regarding the nature of the ‘public interest’ that the Nine Points document sought to promote. This Article recommends that a reorientation of university technology transfer policy may be in order—one that could be facilitated through greater engagement of academic faculty, senior administrators, students, alumni, and other institutional stakeholders in setting policy for university technology transfer