This week, Mark Zuckerberg the CEO of Facebook (FB) stood before the court to testify in a trial lawsuit against one of his company’s acquisitions, Oculus VR. Oculus has been accused of having stolen virtual reality technology from a non-practicing entity (NPE).

However, Zuckerberg refuted those claims in court telling the Jurors that he was aware of the claims and that is why he was there “because I believe they’re false and it’s important to testify to that.” Intellectual Property has been one of the hottest targets for NPEs. NPEs are primarily set up to hatch plans against giant technology companies in a bid to settling for a huge pay off should the lawsuit cases end in their favor.

Ideally, these so-called “patent trolls” specialize in licensing various technologies without the intention of ever using them to develop marketable products. Instead, they prey on companies that try to use such technologies when developing innovative products like the Oculus VR headset on infringing their patents. After an infringement, they file Intellectual property suits against the victims for a potential pay-off.

Now, I am not an expert in Law, but this sounds like extortion. For those who would like to understand the dynamics of intellectual property law better, here is more info.

However, based on recent developments, it looks as though some of these NPEs could run out of business as they continue to lose lawsuits. As per a recent report filed by Bloomberg Law, patent infringement filings totaled 4,624 complaints in 2016 thereby representing a 22% drop from the figures reported in 2015.

This decline has been attributed to the changing atmosphere in the corridors of law. “The recent case law and regulation have made it tougher for patent licensing companies, also called non-practicing entities (NPEs), to mount and win legal fights,” notes the report. This could potentially dry out the cash that NPEs have been receiving from financiers to fund the lawsuits, especially if they continue to lose most of the cases.

Paying for legal fees does not come cheap especially when it involves cases that could potentially affect the stock price of the company. In Facebook’s case, the social media giant could burn well over $2 billion in damages if it loses the case.

While this might be significantly a small amount for the company given its market value of $365 billion, the figure represents roughly 28% of its quarterly revenue and nearly 85% of its net income of about $2.37 billion reported in Q3 2016.

As such, while the company’s stock price might be shaken a bit if Facebook was to lose this case, the long-term outlook wouldn’t move an inch.

Nonetheless, as the data shows, Facebook is likely to come out on top as the law continues to become tougher for NPEs, or the “makers of DOOM” as some have labelled them.

Copyright infringements are expected to stabilize in the near future unless something unexpectedly happens. However, Matt Larson, a litigation analyst at Bloomberg Intelligence, gives an example of the newly inaugurated US President Donald Trump issuing a presidential ruling that shakes up the legal framework surrounding Intellectual Property law as one of the few things that could swing the environment once more.

There has been a substantial decline in patent infringement lawsuits since the numbers shot through the roof in 2013 when there was a total of 6,314 cases filed in federal courts. Whether this substantial decline continues in 2017 remains to be seen.

However, with the defendants increasingly winning their cases, Facebook could soon add to that pile, in which case, it would dissuade potential financiers of NPEs from betting on such schemes.

Conclusion

In summary, the Intellectual Property market has been exploited for several years by NPEs and their financiers. However, as the grey areas continue to be replaced with clear black and white regulations, it’s appeal is beginning to wane a bit.

Nonetheless, with a new POTUS at the helm, you never know what could happen. A single ruling could easily reshape the market in several ways.