Tonight, I recommend Northwest PhD candidate Eric Hovencamp's Predatory Patent Litigation: How Patent Assertion Entities Use Reputation to Monetize Bad Patents.
Here's the author's abstract of the article: "Despite their expertise in patent law, the most litigious patent assertion entities (PAEs) frequently file dubious infringement claims on which they are ostensibly very unlikely to turn a profit. Thus one might conjecture that these PAEs are mistaken to follow through on their litigation threats when their chances of coming out ahead are so scant. To the contrary, this paper demonstrates that this is in fact a calculated strategy of predatory patent litigation: by following through on its threats of seemingly irrational litigation, the PAE develops a litigious reputation that convinces other producers that these threats are credible, leading them to accept licensing offers they would ordinarily rebuff. This allows the PAE to garner substantial licensing revenues using low quality patents that would otherwise be difficult or impossible to monetize."
The article is interesting but suffers a bit from a heavy dose of mathematics guaranteed to knock out all but the economist. It also struggles with formulating a practical strategy to address patent assertion entities (PAEs) that file dubious infringement claims. It should note the AIA trials (e.g., inter partes review) that have been successful at invalidating dubious patent, but instead argues without a lot of evidence "potential defendants could better protect themselves by entering into a litigation cost-sharing agreement." How about avoid litigation altogether? I don't consider myself an expert on this topic, but I have only heard litigation cost-sharing does not works that well. Multiple defendants have different things at stake. Most should settle quickly, while a few may need to go further. So after you quibble over costs and strategy, you typically see a lot of free riding followed by "me first settlements."
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