Definition
A non-practicing entity (NPE) is an organization that owns patents but does not manufacture products, instead generating revenue through licensing or litigation.
Why It Matters Legally
NPEs shape patent litigation strategy because they cannot be countersued for infringement, removing a common defensive lever. Companies must plan differently when facing an NPE.
Example Use Case
An NPE acquires a portfolio of expired-business patents and sends licensing demands to dozens of operating companies.
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Related Terms
Patent Troll, Patent Assertion Entity, Licensing, Patent Litigation, Demand Letter