Defensive Patent Aggregation

Defensive patent aggregation is a business strategy in which a company or a third-party aggregator acquires patents specifically to keep them out of the hands of entities that would use them to sue operating companies, rather than to assert the patents offensively. The strategy responds to the high cost of patent litigation, commonly a million dollars or more before trial and several million more for a full defense, which leaves operating companies vulnerable to settlement demands even over weak claims. Companies used to buy patents individually or pool resources in buying consortia to protect themselves, but in 2008 a new model emerged in which a third-party aggregator purchases patents or patent rights purely to reduce the litigation risk posed by non-practicing entities, then licenses the pooled patents to paying members for a fixed annual membership fee. Modern defensive patent aggregation also includes cooperative cross-licensing arrangements, group purchasing and licensing programs, and pre-emptive challenges to the validity of patents held by non-practicing entities. It is the mirror image of offensive patent aggregation, in which patents are acquired specifically to assert against companies and collect licensing fees.