Formerly Manufacturing Entities: Piercing the Patent Troll Rhetoric

Abstract

Everyone hates patent trolls, those companies that “hijack somebody else’s idea” and use the patents to “extort some money” from companies that actually make things. But not all patent trolls are created equal. This article is the first to focus on one type of patent troll – the formerly manufacturing entity. These patent trolls used to make or do something in commerce, but now derive all or a significant portion of their income through licensing their intellectual property. Using case study analysis, this article demonstrates that formerly manufacturing entities do not impose the harms associated with patent trolls more broadly and, in fact, provide unique benefits for commercialization of new technologies. Specifically, formerly manufacturing entities do not “sneak up” on manufacturing companies, waiting for them to invest extensively in a technology before seeking a license; rather, the technology and the patents are already out in the open, having been practiced by the patent troll. Further, because formerly manufacturing entities have already worked to commercialize the technology, they are in a much better position to assess its value, as well as the costs and risks associated with bringing it to market. We should recognize the benefits formerly manufacturing entities add to commercialization and ensure that potential patent reform measures and judicial solutions to the patent troll problem are carefully drawn not to do more harm than good.