Typology of the patent troll business

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Abstract

Patent trolls have many faces, since the media uses this expression in various ways. The patent troll phenomenon thus seems to be an ambiguous term that is discussed in several directions. This paper reveals that a patent troll as such has no distinct shape or appearance. Our analysis redeems a troll classification solely from firms’ market position, such as being nonpracticing, and shows that a patent troll business can only be defined by the respective practice to enforce intellectual property rights (IPR). Using 10 case studies, of which five are treated in detail, the analysis reveals a distinct typology of IPR enforcement mechanisms and suggests a framework to assess the troll business and its effects. This paper furthermore identifies the nature of troll behavior to be: (a) a practice to enforce IP rights enabling repayments for earlier innovation investments and (b) a strategy that may create costs to affected industries. The differentiated troll analysis reveals negative but also positive effects of the troll business on incentives to innovate.

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