Data makes the difference with non-practicing entities
Litigation is the default method transfer value between patent users and patent owners, and it is hard to imagine a less efficient form of economic exchange or price discovery.
November 21, 2013 at 07:00 PM
5 minute read
At RPX we talk a lot about the need for “market efficiency” in the patent world—about the need for a more cost-effective way to transfer value between patent users and patent owners. Today, litigation is the default method to do so, and it is hard to imagine a less efficient form of economic exchange or price discovery than a lawsuit.
In fact, of the nearly $11 billion spent by operating companies to resolve non-practicing entity (NPE) patent disputes last year, approximately half went to settlements and half to legal costs. In other words, if settlements in theory represent the agreed-upon value of the asset, then the legal expenses represent the transaction costs. This is inefficiency on a massive scale; no economically rational market would ever survive with such large transaction costs.
Now, some might say that settling an infringement suit is not an economically rational act. However, more than 95 percent of NPE cases settle. The users of the patents are paying the owners. So why not make that payment in a more efficient, market-based way that actually reflects the value of the patent rather than hold-up costs of litigation?
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Trending Stories
- 1The Law Firm Disrupted: For Big Law Names, Shorter is Sweeter
- 2Wine, Dine and Grind (Through the Weekend): Summer Associates Thirst For Experience in 'Real Matters'
- 3The 'Biden Effect' on Senior Attorneys: Should I Stay or Should I Go?
- 4BD Settles Thousands of Bard Hernia Mesh Lawsuits
- 5First Lawsuit Filed Alleging Contraceptive Depo-Provera Caused Brain Tumor
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250