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Called patent trolls or non-practising entities (NPE), companies that make most of their money from licensing patents don’t have the best reputation.Just this week, the Wall Street Journal reported U.S. antitrust authorities are probing whether these firms are making high-tech markets less competitive.
Indeed, many tech companies live in fear of NPEs.
It’s tough to quantify which NPEs are the most feared, since many NPE’s simply threaten to sue companies, patent expert James Bessen told Business Insider.
The scariest NPEs, however, tend to be the ones with the biggest patent arsenals, Bessen said. Those companies typically also have the resources to file suit if they want.
With that in mind, BI ranked NPEs based on their number of patents and publicized patent applications as of July 2012 reported by PatentFreedom, a group that provides research for patent defendants.
Note: PatentFreedom defines an NPE as any company that derives the majority of its income from licensing patents. Some of the NPEs listed, like Tessera, also invest in research and development.
BI reached out to every ranked company for which contact information was available.
U.S. patents and patent applications estimated by PatentFreedom: 1,316
What we know about the company: Inventors and patent owners hire Acacia to licence their IP to corporations. Patent owners split the licensing revenue with Acacia.
Acacia says its licensees include Sony, Exxon, Microsoft, and other huge companies.
Columbia Business School professor Raymond Fishman recently profiled Acacia in a story called 'The Troll Toll,' contending it and companies like it stifle innovation.
But Acacia CEO Paul Ryan told BI that people who use the term patent troll are just 'name calling.'
'The issue is if you have valid infringed patents people should pay you for the use of the use of the patents,' Ryan said.
U.S. patents and patent applications estimated by PatentFreedom: 1,375
What we know about the the company: Tessera began as a semiconductor maker but then realised its 'core value' was in licensing its technology, according to the company's website.
'They don't have much in the way of a sales force, but they are expert intimidators and litigators,' Kaller wrote.
Tessera did not immediately respond to a request for comment from BI.
U.S. patents and patent applications estimated by PatentFreedom: 1,696
What we know about the company: Tech blogger Joel Hruska wrote for HotHardware that Rambus is not just a patent troll but 'the patent troll.' Hruska says Rambus had made litigation its top money-making priority for more than a decade.
In September, a judge sanctioned Rambus for destroying evidence in its patent fight against SK Hynix Inc.
Rambus stressed in a statement to BI that it creates the technology it patents, and that the majority of its workers are engineers and inventors.
U.S. patents and patent applications estimated by PatentFreedom: 2,556
What we know about the company: WARF patents technologies invented by University of Madison researchers and licenses those patents througout the world. It gives $45 million each year to fund more research.
While it might seem odd to see WARF on a list of alleged trolls, CleanTech Patent Edge's Kathryn Paisner recently listed it among NPEs that 'reap the benefit of successful products without investing heavily in development, marketing, and logistics.'
To be sure, the University of Wisconsin is far from the only university with a patent-licensing arm. But Stanford Law School professor Mark Lemley has written there's 'a sense among a lot of people that universities are not good actors in the patent system.'
WARF, in particular, is a leader among universities in making money from its large patent portfolio.
An Association of University Technology Managers survey revealed over the summer that WARF had earned the 10th-most patent licensing revenue last year -- $57.7 million -- out of more than 140 universities surveyed.
(Other universities with loads of patent-licensing revenue might also get called 'trolls,' but we have only ranked the NPEs with the largest patent holdings estimated by PatentFreedom.)
Consumer Watchdog, for one, challenged a controversial embryonic stem stell patent of WARF's by arguing it was not in the public interest because it could hinder scientific research.
And industry publication Photonics Spectra has listed WARF among trolls that are 'not the characters you read about in fairy tales.'
WARF itself has acknowledged that it's often pegged as an NPE, and that NPEs are often called 'patent trolls or worse.'
But WARF spokeswoman Janet Kelly told BI that the foundation works very hard to licence technologies so they can be used in the real world.
'Our whole purpose for being is to bring inventions from the university into the world into practical use. That's what we're all about,' she told BI.
U.S. patents and patent applications estimated by PatentFreedom: 2,955
What we know about the company: Interdigital develops wireless technology and also has a 'comprehensive program' to protect its intellectual property, according to its website.
This company is part of the growing world of NPEs, or alleged patent trolls, the Wall Street Journal reported in July 2011.
'Interdigital doesn't have the name recognition of global tech titans, but it can strike fears into their hearts,' the Journal reported.
The company's CEO, William Merritt, told BI that the people at his company are 'big supporters of innovation' and that it should be compensated for those efforts.
'Patents are an important part of any society where a future is going to rely on innovation,' he said. 'There needs to be some means by which people get compensated.'
U.S. patents and patent applications estimated by PatentFreedom: 3,428
What we know about the company: Rockstar appears to be a different beast from other NPEs.
It's funded by tech giants including Apple and Microsoft to scrutinize successful products to see if they infringe thousands of patents, according to a May article in Wired.
That article noted that 'some knock Rockstar as a straight-up patent troll.'
Rockstar did not immediately respond to Business Insider's request for comment.
U.S. patents and patent applications estimated by PatentFreedom: 3,652
What we know about the company: Round Rock is a Mt. Kisco, N.Y. research company with a plain-Jane website.
But the company is really a powerful force in the intellectual property world.
It was founded by one of the nation's top patent litigators, former Kirkland & Ellis patent partner John Desmarais, the Wall Street Journal reported in January.
Round Rock also has a reputation for being a troll.
The Wall Street Journal mentioned Round Rock in a July article about the more widespread use of patent 'troll' tactics, including pressuring companies to licence technologies.
The company did not immediately respond to a request for comment from Business Insider.
U.S. patents and patent applications estimated by PatentFreedom: Well ... this is tricky for Intellectual Ventures. The company has so many subsidiaries that it's difficult to pinpoint the exact number of U.S. patents it has. PatentFreedom estimates 10,000 to 15,000.
Meanwhile, Robin Feldman, a professor of law at UC Hastings, wrote a paper estimating it has 30,000 to 60,000 patents.
What we know about the NPE: Intellectual Ventures is the mother of all alleged patent trolls. It was the subject of an entire episode of This American Life.
The company was formed in 2000 by two former Microsoft employees and is shrouded in secrecy, according to a paper by Feldman.
For its part, Intellectual Ventures says it has acquired 70,000 patents and patent applications during its existence.
As for accusations about being a patent troll, the company says, 'We can't control how other people characterise us, but we are no different than any other company that is protecting its IP assets.'
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