A patent troll is a company who sues over at least one patent, but does not produce any products. As a result, the company cannot be threatened, because you cannot impact their "sales" in any way (e.g. by threatening with other patents) -- they have none. This is in contrast to the typical situation where two companies threaten each other with patents and then (usually) hammer out a cross-licensing deal.
I hate the patent system as much as the next guy, but given what the patent system is meant to do, is there a way to distinguish between patent trolls and legitimate R&D firms that invest in technology and license the resulting patents, but don't actually productize themselves?
1) Do they perform original research themselves, or do they purchase patent rights? If they're not actually generating knowledge, then they're rent-seeking.
2) Do they generate income from licenses, or from lawsuits? Licensing IP is a voluntary transaction for both parties, so the people using the IP believe they're paying a fair cost for it. Lawsuits seek to extract maximum payoff through coercive means, usually because the free-market value of their IP would be vanishingly small.
I'll give you 1, but I'm not sure about 2. I guess if there's a pattern of lawsuits over licensing, but isn't a lawsuit what you resort to if someone uses your patented process without licensing?
What if a company who does research wants to sell its patent rights? Assuming patents are legitimate, that should be possible. Just as composers who sell rights to their songs.
This is an industry term, not an insult.