Non-Practicing Entities in Europe: an Empirical Analysis of Patent Acquisitions at the European Patent Office

The proliferation of non-practicing entities (NPEs) has become a topic of intense academic debate and an important public policy issue especially in the U.S., where academic researchers have focused most of their attention. On the contrary, conventional wisdom holds that the presence of NPEs in Europe is only marginal, due to some combination of higher cost of enforcement and smaller damages awards. In our study, we criticize this view. We use a brand-new database of NPE patent applications at the EPO to assess the presence of NPEs in Europe, by reconstructing their patent portfolios and investigating their main patent acquisition sources, together with the industries they operate in. We find that NPEs own almost 20 thousand patent applications filed at the European Patent Office (EPO), mainly in the Electrical Engineering field where they acquire about 9% of all transacted patents in the last decade. One of our key contributions is to bring data to a heretofore largely theoretical debate about the role of NPEs in the market for technology. We find that, in some respects, NPEs differ significantly from product companies with regard to the characteristics of the patents they acquire, but also that NPEs are very heterogeneous as we find that NPEs’ business models significantly influence the choice of the patents acquired and the use of the patents acquired.