The invisible hand of the intellectual market
While recently reading a post at the excellent IAM blog about the acquisition of Core Wireless Licensing (a Luxemburg based company established by Nokia and holding 400 patents families related to wireless technology) by MOSAID (a Canadian NPE) I came across this sentence:
“Critics of NPEs… have always based their condemnation on the fact that NPEs do not produce anything and do not want to produce anything; instead, it is said, they are leeches who seek to suck money from companies that do produce stuff that people want to buy.”
Every time I hear this or similar descriptions of NPEs I have to admit I get slightly irritated. The reason being that I see NPEs as normal actors of a healthy free market. NPEs are in fact filling a licensing niche and playing an big role in commoditizing the IP market and monetizing it (a point that I believe was made by Joff Wild in his blog when explaining the changing role of these organizations). Granted NPEs are the speculators of a flawed patent systems that allows for broad patents to be issued with dubious validity (US being a major culprit) – but this is an issue caused by the patent systems themselves not by NPEs.
NPEs taking advantage of this and the high cost of patent litigation to take money from companies – is again the action of an actor operating in the free market – making decisions based on self-interest, demand, supply and competition. Given that the underlying problem lies with patent systems it is up to individual countries to reduce the number of patents of doubtful quality through patent office quality control and inexpensive pre/post grant invalidity proceedings. The problem is that progress on this front is much slower than needed.
NPEs exist today because there is a market opportunity. To believe that this business opportunity would have been better left alone does not make business sense; to stop and describe their actions as “harmful, greedy, mean, etc.” and spend hours talking about how much harm they are inflicting is in general a waste of time (unless you are lobbying in front of the respective institutions for better patenting systems and more uniform judging standards).
The truth is in business every company is always mean to someone, inflicting harm on someone to a smaller or larger extent (most often the competitors). Who are you mean to? If the answer is no one maybe you should reconsider your actions….
Image credit: MrGiles