1. No proof is required, which allows large firms to crowd out startups with litigation fees even when they lose the suit.

The patent system's structure establishes a right to exclude for all patent holders. Patents are asserted in a manner akin to a res, a legal right based on a subject matter that can be asserted against the world. No proof of copying is required. The assertion of the right operates as a strict liability tort, and therefore no knowledge of the patent is required before liability attaches. It has been theorized that first inventors who cannot enforce their rights against improvers would lack appropriate incentives to perform original research and "stymie the entire line of technology."208

A startup's products can implicate the patent rights of more than one patent holder. Attempting to obtain clearance cannot be assured, because patent holders have no obligation to license and typically do not license patents obtained to protect their core products.209 If the patentee is willing to negotiate, a license is not assured because the parties may be unable to agree on price. As one scholar observed, “To produce the finished commercial product requires a license to every one of those hundreds or thousands of patents. If the producer misses even a single patent and does not procure a license ahead of time, then it faces the possibility of being held up later.”210

Underlying this concern is the reality that technical progress is cumulative, in that "products are often the results of several steps of invention, modification, and improvement."211 Independent inventors working on the same problem create similar solutions that can create value through a process that leads to multiple technological options.212 Sometimes the iterative work of technical progress is performed by a single entity, but frequently it is performed by a number of inventors working independently.213 As some examples, the inventors of the Nest thermostat did not invent the concept of controlling heating and cooling systems via a centralized controller; rather, their work was directed to improve existing technology. Similarly, the Fitbit was not the first device to track one's steps, or the first remote device to send data wirelessly. Instead, the Fitbit was designed to improve on earlier work of others in this field. In areas of rapid, competitive technological progress, innovation runs into a collision of patent rights by others.

The problem is multiplied in industries where the infringing product is multi-component and, therefore, subject to multiple patents owned by separate entities. As a partial solution, some obtain freedom to innovate through cross- licenses, patent pools, or standards-setting understandings that limit the level of patent royalties.214 If these were the only considerations at play, cross licensing might be a satisfactory private ordering solution. Yet this analysis is incomplete for several reasons. As an initial matter, various patentees are subject to differing incentives that render any complete private ordering solutions unlikely to materialize. For example, assume that a new entrant begins to make and sell a new type of smartphone, and holds no patents. Currently, there is no comprehensive cross-licensing arrangement in the industry to welcomes new entrants. The entrant might encounter companies that hold significant numbers of patents and produce smartphones (or significant components of them) that include Nokia, Apple, Samsung, and Google. NPE's present a separate set of prospective licensors.