《《Acquiring Innovation》.pdf

American University Law R eview Volume 57 Article 2 Issue 4 Apr il 2008 2008 Acquir ing Innovation Xuan-Thao Nguyen J effrey A. Maine Follow this and additional works at : /aulr art of the Intellectual roperty Commons, and the Tax Law Commons Recommended Citation Nguyen, Xuan-Thao. et al. “Acquiring Innovation.” American University Law R eview 57, no.4 (April 2008): 775-819. This Article is brought to you for free and open access by the Washington College of Law Journals Law R eviews at Digital Commons @ American University Washington College of Law. It has been accepted for inclusion in American University Law R eview by an authorized administrator of Digital Commons @ American University Washington College of Law. For more information, please contact fbrown@. Acquir ing Innovation Abstract In recent years, the innovation market has witnessed a new business model involving companies that are mere patent holding shells and not operating entities. They have no customers or products to offer, but they do have an aggressive tactic of using patent portfolios to threaten other operating companies with potential infringement litigation. The strategy is executed with the end goal of extracting handsome settlements. Acquisitions of patents for offensive use have become a major concern to operating companies because such acquisitions pose the threats of patent injunction, interrupting the business and crippling further innovation. W hile many operating companies today know that innovation is the cornerstone of the technology and information based economy, not many companies today self-develop every segment of their end products or services. If a company cannot self-develop certain innovations, it can acquire the innovations. urchases, transfers, and licenses of technology are common occurrences, which allow c