> How often do entities like universities or a Paul Allen type company sue for patent royalties? (This isn't to discount your comment in any way. I'm just genuinely curious whether such entities derive substantial revenue from enforcing patent rights, and whether trolls account for >95% of the revenue from patents.)
Part of the reason revenue is skewed toward patent trolls is the way they litigate. In most legitimate negotiations the inventor shows the patented invention to the prospective licensee who then decides whether the amount required to license the patent is worth it for including that feature in their product. If the patent holder is asking too much then the prospective licensee can walk away and pay nothing by just not adding that feature to their product. In this situation there is hardly ever any need for litigation since it would only occur if the company consciously chose to use the technology without licensing it.
By contrast, patent trolls almost always knock on the doors of companies that are already allegedly infringing their alleged patents. In that case the practicing entity has no option to walk away because they can be sued for past infringement even if they change their product immediately and will incur significant legal expenses even if they win in court. Furthermore, juries have the unfortunate tendency to vastly overestimate the market value of many patents, and now the defendant has to negotiate against a possible jury award rather than the actual market value of not being able to use the technology.
This all adds up to mean that the trolling behavior of filing a lawsuit against someone already allegedly infringing has a much larger revenue potential than the honest behavior of offering to license a new technology to a company that isn't already using it. It also means that the trolls make up a disproportionately large percentage of actual litigation.
Part of the reason revenue is skewed toward patent trolls is the way they litigate. In most legitimate negotiations the inventor shows the patented invention to the prospective licensee who then decides whether the amount required to license the patent is worth it for including that feature in their product. If the patent holder is asking too much then the prospective licensee can walk away and pay nothing by just not adding that feature to their product. In this situation there is hardly ever any need for litigation since it would only occur if the company consciously chose to use the technology without licensing it.
By contrast, patent trolls almost always knock on the doors of companies that are already allegedly infringing their alleged patents. In that case the practicing entity has no option to walk away because they can be sued for past infringement even if they change their product immediately and will incur significant legal expenses even if they win in court. Furthermore, juries have the unfortunate tendency to vastly overestimate the market value of many patents, and now the defendant has to negotiate against a possible jury award rather than the actual market value of not being able to use the technology.
This all adds up to mean that the trolling behavior of filing a lawsuit against someone already allegedly infringing has a much larger revenue potential than the honest behavior of offering to license a new technology to a company that isn't already using it. It also means that the trolls make up a disproportionately large percentage of actual litigation.