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Patent Assertion Entities Plague Electronics Industry, Targeting Ordinary Folks for Monetary Gain

Image via Flickr by San Jose Library

Patent assertion entities (PAEs) do not invent anything. They don’t develop nor engineer products. They don’t even sell products. PAEs exist for no reason other than buying up lots of patents for products invented, developed, and produced by others, and use these patents as the basis for expensive, time-consuming lawsuits against the companies that do invent, develop, patent, manufacture, and sell real products. Now, these PAEs are also going after end users of the products they claim to hold patents on. This includes small mom and pop grocery stores, hotels, and cafes, from which the PAEs are trying to milk licensing fees and other fees.

Cisco, Hewlett-Packard, Motorola, and other electronics developers, manufacturers, and distributors are spending millions of dollars to defend their companies against such lawsuits. Some of these companies have gone one step further and tried to seek legal aid in stopping these predatory practices. So far, courts haven’t sided with the real electronics companies, and have instead defended the rights of the PAEs to do what they are doing.

Now, the PAEs have gotten President Obama’s attention and other Washington legislators, who are aware of the problem and seem willing to step in. This follows another recent court ruling against Cisco in Chicago. Large electronics OEMs like Cisco want to make people aware that these lawsuits are driving up the costs of our electronics products, because these companies have to pay tremendous legal fees to defend their product rights, above and beyond the costs of developing, manufacturing, and distributing the electronic products people want and need.

PAEs do not solely target the electronics industry, but this is where the impact is most felt in the United States. OEMs like Cisco at least have the millions of dollars it takes to defend themselves in a court of law. Most of the smaller innovators, from which most new products don’t come from, are quickly eaten alive by the legal attacks of PAEs.

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