Introduction
The management of IP, including utility and design patents, has been completely changed from its original defensive nature to an aggressive business practice in the tech industry. Large technology corporations have resorted to patents not just as a way to safeguard against any infringement, but as a means of controlling the market and defining industry standards. Patents are used as tools of restriction for the activities of competitor companies, inhibiting them from selling their goods and receiving licensing fees.
Patent strategies can be pursued either offensively or defensively. Offense entails pursuing strategies to ensure that the patent laws are enforced to secure a monopoly in a particular technological area. The defensive approach involves creating a large collection of patents to deter litigation with threats of countersuits.
The reach and finances of a company show their influence on patents, as the majority of technological firms integrate various strategies to maintain an expansive patent ecosystem. But startups and small firms which face high patent filing and maintenance costs often take defensive publication strategies. They establish priority by publicising their innovations, preventing major corporations from monopolising the ideas later.
Patent Thickets and Raising Rivals Costs
Patent thickets refer to the tangled web or clumps of Intellectual Property Rights created by companies via filing numerous patents on small innovations, modifications, and improvements related to the basic technology. Instead of relying on one patent, dominant companies in any particular technology have filed numerous patents that cause severe difficulties for other companies in creating similar products due to expensive litigations.
Patent thickets emerged in the sewing machines and aircraft industries in the nineteenth and twentieth centuries respectively, where competing patent rights were considered a barrier in industrial development. In today’s technology industries, patent thickets play defensive and offensive roles. First, patent thickets help businesses operate freely by acting as a threat to litigation using their own patents. Second, patent thickets are used offensively to “raise rivals’ costs” (RRC).
By using techniques such as “patent flooding” , it has been observed that firms tend to file for patents close to their competitors, which in turn raises the cost of searching and licensing patents by competitors. Stacked Royalty is one such patent technique through which the production cost is increased and competition in the market is reduced. Due to the barrier created by the patents, new entrants find it tough to compete in the race for technology and innovation since there could be chances of infringement cases being filed against them.
Patent Privateering & Hybrid Assertion Models
Intellectual property management has evolved such that it has led to what is known as “patent privateering.” This involves an organization within the specific technology field transferring their patents to an NPE or PAE with the goal of having indirect attacks aimed at other firms. In this case, the operating firm is considered the sponsor while the NPE acts as the privateer suing other firms on matters related to patent issues.
Both the privateer and the sponsor benefit in this arrangement because the privateer makes money from settlements, royalties, and damages while the sponsor benefits through decreased competition, enhanced market power, and absence of competitive threats without lawsuits. Inasmuch as the NPE does not manufacture any products, it cannot be counter-sued.
Patent privateering tends to be more common in sectors such as telecommunications and software because they have fragmented and litigious patent landscapes. Research indicates that it is predominantly practiced by large multinational firms rather than individual inventors. Using privateers, large multinational firms are able to derive further business benefit from the use of patents which are inherently defensive in nature.
The challenge of antitrust regulation in relation to patent privateering results from the independent nature of patent privateering as well as the task of uncovering any proof of anti-competitive behavior. This is because patent privateers operate independently of corporations, and so it becomes challenging to prove any anti-competitive agreements among them.
The modern-day economy depends on the global technological standards such as Wi-Fi, Bluetooth, 4G, 5G, and video compression standards. These patents are known as Standard Essential Patents (SEPs). Because it is necessary for manufacturers to have those patents to create their products that would be in compliance with the standards, SEPs give their owners great market power. In order to prevent any abuse of market power, SSOs require that patent holders license SEPs in accordance with FRAND.
However, the presence of the SEP system is associated with never-ending court cases, which take place due to opposing forces at work in the system, such as patent hold-up and patent hold-out. Patent hold-up can be defined as the situation when SEP holders abuse their market power and seek royalty payments in excess of what they can receive through negotiations and file lawsuits for injunctions. Hold-out is a case when a patent implementer stalls in the licensing negotiations or fails to pay FRAND royalties.
Another famous case related to intellectual property licensing is FTC v. Qualcomm Incorporated. In 2017, the commission launched a lawsuit against Qualcomm claiming that the company was utilizing a monopoly in the cellular modem chips market in violation of antitrust laws. The main strategy of the firm involved following the “no license, no chips” rule. Qualcomm would not provide its modem chips to cell phone producers who had not signed any agreements with Qualcomm regarding licensing. Additionally, the firm did not license its competitors and cooperated exclusively with device producers, which allowed Qualcomm to calculate royalties in accordance with retail smartphone prices and not component prices.
The case of Qualcomm was lost by the company in 2019 since the court rejected all the company’s practices and issued an injunction against licensing policies. However, the judgment of the court was overturned in 2020 by the Ninth Circuit. Namely, the court declared that there were no antitrust duties to license competitors as in the case of Aspen Skiing Co. v. Aspen Highlands Skiing Corp. The circuit pointed out that FRAND licensing agreements were covered by patent and contract laws but not antitrust laws.
It helped create some notable industrial settlements as well. The global agreement between Qualcomm and Apple included an annual licensing and chipset settlement valued at $5 billion. In the same way, the case of Apple v. Samsung showed the high economic value patents had for smartphone manufacturers. As a result of the initial award made in that case, where Apple was suing Samsung, the company got $1.049 billion as compensation for violating its design and utility patents. However, the Supreme Court of the United States concluded that damages from a design patent should refer only to the infringed element of the device.
One more important court decision was reached in the case Oracle v. Google. Oracle argued that Google had used some API codes without a license. According to the decision of the Supreme Court of the United States, such action could be considered fair use because using the code made it possible for the programmers to utilize their knowledge on a new platform.
However, SEP disputes are currently no longer restricted to smartphones alone, as they have also spread to the automotive industry and the Internet of Things (IoT) domain. There have been various lawsuits by companies like Ericsson, Nokia, Inter Digital, and Optis concerning telecommunications technology, streaming technology, and connected automobiles. The judicial systems of different nations, including Germany, the UK, India, Brazil, and the Unified Patent Court, are also influencing the meaning of FRAND licensing and global SEP licensing procedures.
Modern Frontiers: AI and Display Patent Land Grab
The worldwide patent activity is currently experiencing an increase never seen before, fueled primarily by the rivalry in AI and high-end display innovations. As much as 3.55 million patents have been filed around the globe in 2023, according to WIPO. At the same time, patent litigation has grown more severe in the United States, with cases amounting to almost 1,200 per year by 2025 and a sharp rise in damages awarded in successful patent trials.
As for the rapid growth of innovations in the realm of AI, it has also led to an increase in the application of AI technologies to patent analysis and market intelligence. The modern tools increasingly use “Agentic AI” that performs semantic and real-time prior art analysis using transformers as opposed to traditional keyword searching approaches.
The first notable element that has made this situation possible has been the adoption of the pro-patenting policies by the US Patent and Trademark Office (USPTO) in the year 2025. As part of these pro-patenting policies in conjunction with rulings in cases such as Ex parte Desjardins, the USPTO has endeavored to increase the patentability of artificial intelligence technology. Further steps have also been introduced in order to help the patentees overcome the hurdles of 101 rejections on the basis of the abstractness of their inventions.
Patent filing for AI inventions is no longer limited to software organizations only. Several firms in industries including auto manufacturers such as Toyota, Ford and Hyundai, and financial institutions such as Capital One and Bank of America have been busy applying for patents related to AI technologies applicable in their industries. Patent filing has been concentrated on explainable AI, multi-modal technology and supply chain automation. In contrast, litigation has persisted over issues related to displays due to their significant economic value in digital industries.
Counter-Reforms through Regulation and Legislation
The warfare techniques used by Big Tech have prompted a harsh response from legislators and regulatory actions in the US and Europe through proposed reforms which aim to restructure patent laws to prevent anti-competitive abuse.
US: Legislative Reforms
Some of the most noteworthy efforts taken to increase patent protection and prevent companies from misusing patent laws in the USA include the following. For example, at the moment, one of the most significant legislative initiatives is the Patent Eligibility Restoration Act (PERA) for 2025/2026 introduced by senators Chris Coons and Thom Tillis. The gist of the bill is that it attempts to solve problems caused by some judicial decisions, which resulted in more stringent requirements to obtain a patent. According to the bill, judicial exceptions should be substituted by statutory ones, such as the exception of “abstract ideas.” Moreover, the condition of “practically performed without a machine” will help differentiate between non-patentable mental processes and patentable computer programs.
One more suggested change in patent law legislation is called the PREVAIL Act; this proposal tries to address the issue of abuse of the PTAB system by big firms making several PTAB petitions to target the patent and raise litigation costs. Standing requirements included in this act will limit the possibility of filing patent challenge requests to only those having an interest in this process. Moreover, this bill will require the application of clear and convincing proof standards as in federal courts.
The other legislative proposal RESTORE Patent Rights Act reintroduced in 2025. Its purpose is to give additional powers to the owners of intellectual property when enforcing their patent rights by introducing rebuttable presumption of injunction following infringement finding.
EU: Regulatory Actions
The process of reforming SEP regulations in Europe has not been without obstacles, leading the policymakers to opt for the less cumbersome path of compulsory licenses and judicial intervention. The European Commission introduced the highly contentious SEP Regulation in 2023 that aims at developing an SEP register by harnessing the services of the EU Intellectual Property Office while conducting essentiality reviews and requiring mandatory conciliation before judicial involvement in calculating royalties. The proposal received a lot of backlash for being overly bureaucratic, delaying court intervention, and undermining the authority of the UPC. The proposal was eventually withdrawn by the EC in October 2025 due to disagreements between member states but the European Parliament challenged the withdrawal in court before the CJEU.
On the other hand, the EU was able to enact its regulation 2025/2645, which was implemented beginning January 2026. The law makes provision for mandatory harmonized licenses during emergencies and crisis periods. Using this approach, the EU Commission is able to license the use of any invention under a patent during emergencies without seeking permission from the patent owner but with compensation.
The EU courts have increased the area of their judicial competence in enforcing foreign patents. In the case of BSH Hausgeräte GmbH vs. Electrolux AB (2025), it was decided that EU courts could hear patent infringement cases in respect of foreign patents in relation to EU defendants. This ‘one court’ principle further established the role of Europe as a major battleground in international patent disputes.
Conclusion
The modern IP system, which was initially based on a set of laws protecting IP rights, has evolved to become a formidable tool for securing economic and technological dominance. Patents are used in a strategic manner with the use of patent thickets, privateering, and huge lawsuits in order to limit competition, increase the cost of entry, and dominate the market through technological firms. With innovations increasingly relying on artificial intelligence, telecommunication technologies, and other forms of digital infrastructure, patents have gained geopolitical relevance.
There have been numerous attempts at reforming the patent system due to the aforementioned reasons. Legislation in the US such as the Protecting American Innovations Act and the Restoring the Enforcement of Intellectual Property Rights Act seeks to enforce patents, expand patentability, and restore injunctive relief. On the other hand, the EU has introduced compulsory licenses and expanded jurisdictional reach of patents in order to protect its technological sovereignty and secure its supply chains. Ultimately, technological superiority in the future will mean not only innovation but strategic management of intellectual property.
Author: Anshika Kumari. In case of any queries please contact/write back to us via email to [email protected] or at IIPRD.