Effect of Non-Practicing Entities on Innovation Society and Policy: An agent based model and simulation

Seokbeom Kwon / Kazuyuki Motohashi


Non-practicing entities (NPE) have been controversial patent market players in terms of their effects on innovation society, owing to their having both positive and negative impacts on society-level innovation performance. However, measuring the net effect as well as finding ways to control the probable negative effects has been a challenging issue. In this paper, we propose an agent model of the patent market to address the issue. We conduct a simulation to test whether NPEs produce more harm than good. Further, a computational study evaluates the efficacy of possible legislative options to control NPEs' undesirable effects, which are being discussed by scholars and policy makers in the U.S. Our result concludes that the negative effects of NPEs are likely to outweigh their potential benefits. In addition, it provides a first look at the effectiveness of each policy in relieving the NPE effect. We provide a quantitative ground for policy makers to use in discussing policy options regarding the NPE issue and practical guideline for implementation of such policies.