Contrary to popular media, the Report confirms that many businesses known as patent assertion entities are financially sound with (i) hundreds or thousands of patents and (ii) substantial investments by other institutions and manufacturing companies. Also contrary to popular media, the Report confirmed that by themselves patent infringement assertion letters did not generate low revenue licenses for PAEs.
Instead, according to the Report most licenses with targeted potential infringers followed a patent infringement law suit for 93% of Litigation PAE licenses and 29% of Portfolio PAE licenses. In fact, Portfolio PAEs generally reached licensing commitments without commencing a lawsuit against a potential licensee. However, they did often send demand letters to initiate these licensing negotiations. For this purpose, Portfolio PAEs generally employed dedicated management and licensing executives with prior licensing experience. The strong implication is that state statutes which purport to penalize bad faith patent infringement assertion letters are superfluous and only prevent legitimate patent owners from protecting their property rights.
Although Portfolio PAEs accounted for only 9% of all licenses in the Report studies, these same licenses generated 80% of all revenue in these studies. If the reader now concludes that Litigation PAEs are the villains, wait a minute because the Report further confirms that Portfolio PAEs sold patents to Litigation PAEs! The motivation for these sales includes a patent ownership transfer for a revenue share that the acquiring Litigation PAE may obtain through litigation and settlement. At the other end of the chain, by raising capital from investors and purchasing patents with a large upfront payment the Portfolio PAE provides the original patent owners with guaranteed revenue and zero risk. In this model and except for bad actors, every patent transfer contributes to a legitimate win-win business model, and especially for independent inventors and businesses who initially transfer ownership for a revenue stream and enforcement expertise.
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 “Patent Assertion Entity Activity,” Federal Trade Commission (October 2016) [hereinafter ‘the Report’].
 Hereinafter designated as PAEs.
 These businesses are known as Portfolio PAEs.
 According to the Report study, Litigation PAES typically sued potential licensees and settled shortly afterward by entering into license agreements. The licenses were directed to smaller patent portfolios which often comprised fewer than ten patents, and affiliates were created which sued on behalf of the holding company. Litigation PAEs comprised little or no working capital and relied upon agreements with the original patent owners to share future revenue for funding.
 The Report at 5.
 Id. at 46.
 For example, see North Carolina Gen. Stat. sections 75-140 et seq.
 Id.at 3 and 46.
Id. at 46.
 Id. at 46-47. Investors with a greater risk tolerance may then receive the financial upside of successful infringement assertion activities. In addition, manufacturing firms may transfer patents to Portfolio PAEs for infringement matters. This transfer is beneficial from a business perspective because Portfolio PAEs may lower costs and there are no reputation concerns. Portfolio PAEs also exhibit significant licensing expertise based upon their specialization in patent assertion. Id. at 47.