Before explaining patent troll, it is important for you to get acquainted with two terms- patent and NPE. A patent is a government issued license which provides an inventor (person or an organization) with exclusive rights of manufacturing, using or selling the invented product for a specific period of time. NPE (Non Practicing Entity) is a term used for small and large patent aggregators, individual inventors and universities holding the patent of a product, but do not develop that product.
Patent troll is another termused for Non Practicing Entity. Many NPEs do not commercialize their patents. The purpose of not commercializing their patents is to enforce it through a lawsuit. Differentiation between practicing and Non Practicing Entities can be helpful in the better understanding of patent troll.
Non practicing and practicing entities, both have the right to manufacture a product. However, unlike NPE, a practicing entityhappens to manufacture, use or sell that particular product. Most of the practicing entities do their own research and development to acquire and hold a patent. On the other hand, patents of a product by NPEs are acquired from other companies and inventors that are not using their patent.
NPEs are always criticized as NPEs do not actually compete in the market. And, they also make a huge amount of money through lawsuit settlements as 90% of the lawsuits instituted by Non Practicing Entities are believed to end up settling the issues mutually.
Unified Patents 