Steve Moore was recently featured in the Managing IP article "Going Public? Beware NPEs."
US companies seeking to go public, or those that recently issued an IPO, appear to be at an increased risk of finding themselves in the sights of NPEs (non-practicing entities). A study developed by High-Tech Solutions and commissioned by the LOT Network gathered data on over 6,000 lawsuits in a five-year period and found that over one third of the 247 companies that had gone public were targeted by NPEs two years before or after IPO. Steve told Managing IP "it has always been a concern for those involved in IPOs that a third party might come 'out of the woodwork' to sue the company before it goes public."
While some believe the two-year window on either side of an IPO is too broad a time period to reliably connect it to the actions of NPEs, the consequence is clear: "bringing a suit will cause a dramatic impact on the IPO process and the company involved will be greatly incentivized to settle the dispute rapidly," Steve said. While larger companies may be better equipped to weather the storm, startups may find themselves underwater as NPE lawsuits divert critical resources. These suits can be damaging to any company preparing to IPO and are most commonly initiated by NPEs. "As most IP suits are filed by what is referenced as NPEs, it is not surprising the NPEs are involved in the lion's share of such 'IPO interference' suits," Steve stated.
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