NPE Showcase – VirnetX

VirnetX is a classic example of an NPE that does not qualify as a "patent troll." How can you tell? Patent trolls leverage the litigation system to negotiate settlements for less than the cost of defending against a lawsuit. VirnetX, on the other hand, licenses its patents for eight and sometimes nine figures. Patent trolls normally prefer to keep their operations as confidential as possible, as I wrote about in connection with the District of Delaware. But VirnetX is a publicly traded company and is required to disclose information a patent troll wouldn't dare make public. Their tactics are rather interesting and worth a discussion.

VirnetX owns patents directed to DNS and network communication technology. The licensees of these patents are typically large telecommunication companies who are ubiquitous in the electronics industry. All of this is quite common with large damages awards and licensing fees. But some would even argue VirnetX is not an NPE at all since