Effect of Non-Practicing Entities on Innovation Society and Policy : An Agent Based Model and Simulation

Effect of Non-practicing entities (NPE) on innovation society has been a controversial issue owing to their having both positive and negative impacts. However, measuring the net effect as well as finding ways to reduce the probable negative effects of the NPEs has been a challenge. In this paper, we propose an agent-based model of the patent market to address the issue. We conduct a simulation to test whether NPEs produce more harm than good. Further, a simulation evaluates the efficacy of possible legislative options to control NPEs' undesirable effects, which are being discussed in the U.S congress. 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's negative effect. We provide a quantitative ground for policy makers to discuss policy options regarding the NPE issue and a guideline for implementation of such policies