GLOSSARY
What is a Patent Assertion Entity?
Understanding PAEs (patent trolls)—what they are, how they operate, and strategies for defense.
Definition
A patent assertion entity (PAE), sometimes called a non-practicing entity (NPE) or colloquially a "patent troll," is a company that acquires patents primarily to license or assert them against others, rather than to make products.
How PAEs Operate
- Acquire patents: Purchase patents from inventors, bankrupt companies, or universities
- Identify targets: Find companies whose products may use the patented technology
- Send demand letters: Contact targets with licensing demands
- File lawsuits: Sue companies that don't agree to license terms
- Settle or litigate: Most cases settle; some go to trial
PAE Litigation Statistics
- PAEs file 50-60% of all patent lawsuits in the US
- Average PAE demand: $1-3 million for small companies
- Most cases settle for less than the cost of litigation
- Certain technology areas (software, e-commerce, mobile) are most targeted
Defense Strategies
- Prior art research: Find art that invalidates the asserted patents
- IPR proceedings: Challenge patent validity at the Patent Trial and Appeal Board
- Collective defense: Join industry groups that share defense resources
- Insurance: Patent litigation insurance for small to mid-sized companies
- Proactive monitoring: Track PAE activity in your technology space
How AI Helps Defend Against PAEs
AI tools help by monitoring PAE campaigns, identifying prior art for defense, analyzing assertion patterns, and building proactive defense portfolios.