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Publicly Traded NPEs Take Investors for a Bumpy Ride

November 26, 2014

​Fenwick & West patent litigation partner David Hadden was quoted by The Recorder in an article examining recent developments in the patent monetization landscape.

The feature details the growth in the number of non-practicing entities (NPEs) that embark on risky, but sometimes highly lucrative, infringement litigation. Given the unpredictability of the litigation strategy, however, some patent monetization ventures have begun to rely less on court battles and more on recurring royalties for revenue. Another reason for the shift is the interest Congress and the U.S. Supreme Court have shown in requiring NPE ownership details and assets to be more transparent.

The Recorder asked Hadden to comment on early-stage NPEs, which aren't able to cite the usual metrics for measuring their assets or may use confidentiality agreements that keep the information out of reach.

"The business model, when you think about it, is completely opaque to the normal investor," Hadden said. "It's not like they're making things that can be counted when they're sold."

The full article is available through The Recorder's website (subscription required).