Non-Practicing Entities (NPEs)

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Non-Practicing Entities (NPEs)

An NPE is typically an organisation or individual that enforces patents but does not themselves implement the technology – does not manufacture products.

NPEs may includes:

  • Holding companies
  • Research organisations and Universities
  • Investment houses
  • Patent pools
  • Individual inventors

 

The term Patent Assertion Entities (PAEs) is also sometime used to distinguish between an NPE that may be a technology creator that does not practice the technology and a pure assertion entity. In our view both NPEs and PAEs should be seen as having positive roles in the landscape in terms of increasing the ability of innovators to monetise their inventions.

The term Patent Troll is sometimes used in the pejorative to indicate a person or company that acts in a manner considered unduly aggressive or opportunistic.

Patent Pools

Patent Pools, or patent licensing platforms are a particular form of NPE where group of companies pool their SEPs for a particular standard. The pool administrator (typically but not always an independent entity) acts as a one-stop-shop to license the combined portfolios as a single package.

  • Licensees get simpler, cheaper and more certain:
    • A single agreement is negotiated – reduced transaction costs
    • One royalty payment made – reduced administration and auditing requirements
    • Royalty rates typically represent a discount compared to individually negotiated licences
    • Reduced risk of infringement (but not eliminated as patent holders may exist outside of the pool)
  • Licensors get greater market coverage, simpler administration, reduced transaction costs

Patent pools are generally viewed as pro-competitive by competition authorities provided some safeguards are followed, as it is generally accepted that a pool can encourage the adoption of the technology which has benefits for consumers.

  • Successful examples exist in motion picture and audio related technologies such as CD, DVD, MPEG, MP3. Note that these technologies are more well defined and “simpler”

Patent pools exist in cellular technologies, but the picture is more fragmented. PlatformWCDMA tried for 3G, and multiple pools started for LTE including MPEG, Via Licensing and Sisvel.

Cubicibuc Cellular Pool examples
Cubicibuc Cellular Pool examples

 

Contact information

For more information on the patent pools and licensing entities listed above please see their individual websites:

 

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