Patent Attorney and Founder
Why does the U.S. allow patent trolls? Learn why companies can buy patents solely to enforce them and how U.S. patent law views non-practicing entities.
Why Does the U.S. Allow Patent Trolls?
If you’ve spent any time reading about patents, you’ve probably come across the term “patent troll.” It’s a phrase that gets thrown around a lot, especially when a company sues another business over a patent without making or selling any products of its own.
That raises an interesting question:
Why does the United States allow companies to purchase patents solely for the purpose of litigation?
At first glance, it can seem unfair. Why should a company that doesn’t manufacture anything be allowed to enforce a patent?
The answer is actually rooted in one of the fundamental principles of the U.S. patent system.
In this article, I’ll explain:
- What patent trolls and non-practicing entities are
- Why patents can legally be bought and sold
- Why patent enforcement is considered a legitimate business activity
- The economic reasoning behind the U.S. patent system
- What this means for inventors and businesses
What Is a Patent Troll?
The term patent troll is an informal, and often negative, label used to describe a company that owns patents but doesn’t manufacture products covered by those patents.
A more accurate legal term is non-practicing entity (NPE).
A non-practicing entity owns intellectual property but doesn’t necessarily produce or sell the invention itself. Instead, it may generate revenue by:
- Licensing patents
- Selling patents
- Enforcing patent rights through litigation
Not every non-practicing entity is a patent troll. Universities, research institutions, inventors, and patent licensing companies are also non-practicing entities, yet many play an important role in innovation.
If you’d like to learn more about licensing patents as a business strategy, see Patent Licensing:
https://boldip.com/blog/patent-licensing/
A Patent Is Property
One of the most important ideas to understand is that a patent is a property right.
Just like you can sell:
- A house
- A car
- Stocks
- A business
…you can also sell a patent.
Once a patent is issued, it becomes an asset that can be:
- Bought
- Sold
- Assigned
- Licensed
- Used as collateral
- Enforced by its new owner
That means the identity of the patent owner can change over time without affecting the legal rights attached to the patent.
Whether the owner is the original inventor, an investor, or another company, the patent remains enforceable.
If you’re new to patents, our Patent Glossary can help explain common legal terms:
https://boldip.com/blog/patent-glossary/
Why Does the U.S. Allow This?
Here’s the key idea.
The purpose of the patent system isn’t necessarily to ensure that every inventor builds a company or manufactures a product.
The purpose is to reward innovation.
When an inventor creates something that is:
- New
- Useful
- Non-obvious
the government grants a limited monopoly through a patent.
That patent has value because it can be commercialized in different ways.
Some inventors choose to:
- Build a business
- Manufacture products
- Raise venture capital
Others decide to:
- License the invention
- Sell the patent
- Assign the rights to another company
The law generally doesn’t dictate which business model an inventor must follow.
Why Selling a Patent Can Benefit Inventors
Imagine you’ve spent years developing a breakthrough technology.
You’ve invested your own money.
You’ve hired engineers.
You’ve worked nights and weekends.
Eventually, you receive a U.S. patent.
Now suppose you don’t have millions of dollars to manufacture the product or build a nationwide sales team.
Selling your patent may be the best business decision available.
When another company purchases your patent, you’re compensated for the innovation you’ve created.
That’s exactly what the patent system is designed to encourage.
The inventor receives financial value for contributing something new to technology.
Patent Enforcement Is Part of the System
Some people assume that lawsuits are somehow outside the purpose of patents.
In reality, enforcement is built into the system.
A patent gives its owner the legal right to prevent others from making, using, selling, or importing the claimed invention without permission.
If someone uses your patented invention without authorization, what lawyers call patent infringement, the patent owner has legal options.
Those options include:
- Sending a licensing request
- Negotiating a settlement
- Filing a patent infringement lawsuit
Without the ability to enforce patents, many patents would have little practical value.
If you’d like to learn more about enforcement, read our guide on Patent Litigation:
https://boldip.com/blog/patent-litigation/
Is This Just Capitalism?
In many ways, yes.
The U.S. patent system is designed around market incentives.
Here’s the cycle:
- An inventor creates something new.
- The inventor receives a patent.
- The patent becomes a valuable asset.
- That asset can be sold or licensed.
- The inventor receives financial compensation.
- Investors and businesses continue funding innovation.
Because patents are transferable property rights, the law generally doesn’t distinguish between an inventor enforcing a patent and another lawful owner enforcing it.
The transaction itself is considered part of a functioning intellectual property marketplace.
Why the Debate Continues
Although patent enforcement is legal, the debate over patent trolls continues.
Critics argue that some companies:
- File large numbers of lawsuits
- Target businesses with expensive litigation threats
- Seek settlements instead of courtroom victories
Supporters respond that:
- Property rights should remain enforceable regardless of ownership.
- Inventors deserve the ability to sell their patents.
- Patent buyers create liquidity in the innovation marketplace.
- Strong enforcement encourages investment in research and development.
Over the years, courts and Congress have introduced various legal standards to discourage abusive litigation while preserving legitimate patent rights.
Like many areas of intellectual property law, the discussion involves balancing innovation, competition, and fairness.
What This Means for Inventors
If you’re an inventor, entrepreneur, or startup founder, here’s the practical takeaway:
A patent isn’t just a legal document.
It’s a business asset.
You may eventually decide to:
- Manufacture your invention.
- License your technology.
- Sell your patent portfolio.
- Partner with investors.
- Enforce your patent rights if necessary.
Each path has advantages depending on your goals and resources.
Understanding those options early can help you build a stronger intellectual property strategy.
If you’re considering filing your first patent, you may also find these resources helpful:
- Utility Patent: https://boldip.com/blog/utility-patent/
- Patent Costs: https://boldip.com/blog/patent-cost/
- Patent Attorney Pricing: https://boldip.com/patent-attorney-pricing/
Final Thoughts
The phrase “patent troll” often oversimplifies a much more complex issue.
Yes, some companies purchase patents primarily to enforce them. But the ability to buy and sell patents is also what allows inventors to monetize their innovations, even if they never manufacture a product themselves.
At its core, the U.S. patent system is designed to reward innovation by treating patents as valuable property rights. Whether those rights are enforced by the original inventor or a later purchaser, the law generally recognizes both as legitimate owners.
So, if you owned a valuable patent, would you build a company around it, license it to others, or sell it to someone better positioned to commercialize or enforce it?
There isn’t one right answer, but understanding your options can make all the difference.
Ready to Protect Your Innovation?
It is my hope that this article gives you the knowledge and clarity you need to Go Big and Go Bold℠!
If you have questions about protecting your invention, licensing a patent, or developing an intellectual property strategy, book a free discovery call today:
Legal Note
Legal Note: This blog article does not constitute legal advice. Although the article was written by a licensed USPTO patent attorney there are many factors and complexities that come into patenting an idea. We recommend you consult a lawyer if you want legal advice for your particular situation. No attorney-client or confidential relationship exists by simply reading and applying the steps stated in this blog article.