> It doesn't do anything about non-practicing entities because it can't. There's no formulation of words that could cause a license to have any bearing on NPEs.
That isn't true at all. You can do something about NPEs by changing the behavior of their targets. You take away the ability to license a patent without securing a license for everyone and now the troll can no longer rely on extracting nuisance value settlements from large numbers of targets, because for the target the cost of losing the reciprocal license (and having to fight all of those patent holders) now exceeds the cost of invalidating the troll's patent. And if everyone sees the same calculus and everyone fights, trolling as a business model could become unprofitable.
> Your potential wording would make the patent license completely unusable.
Why is that? The ideal endgame would be to bring about a de facto nullification of software patents. The more patents that become licensed under the defensive license, the more incentive there is to put all of your own patents under it, which creates all the more incentive for others to do the same. Obviously you wouldn't have e.g. IBM signing on the first day, but as it snowballs the incentive to do so increases over time. At the end of the chain you would have a situation where there would be ten times as many patents that IBM is infringing than they own and the only way they could get a license to those patents is to join the agreement with everyone else.
I would think another interesting feature would be to allow anyone who has signed on to the agreement to use any of the signatories' patents offensively against anyone who hasn't, in exchange for a large chunk of the proceeds, essentially on a contingent fee basis. I believe a third of the amount recovered is typical? That would allow patent trolling to eat itself, because patents lawyers could sign on to the agreement at no cost (since they don't characteristically own patents) and then have instant access to a huge corpus of patents to go sue everyone else with, until such time as everyone relevant has signed on. And it would also create an incentive to sign on in the early days, because if you sign on and have any good patents there is a reasonable chance that some lawyers will go out and sue Microsoft et al at their own expense and then give you half the money. Until there are a lot of signatories that should be about as profitable for existing patent holders as hiring a lawyer to go sue people on your behalf without the defensive conditions, unless everybody starts signing on right away, which would be even better.