Intellectual Property Law: Patent Trolls, The Intellectual Property Predators Trying to Take a Bite Out of Your Business

Stand guard against patent owners who acquire patents, and attempt to enforce them, for the sole purpose of extracting fees. You are not defenseless.

A patent troll is usually a person or entity, often called a non-practicing business entity (NPE) that seeks to enforce patents against alleged infringers in an aggressive manner. Often the NPE purchases patents from businesses in need of money or entering bankruptcy and devotes itself to enforcing patent rights when in fact has no intention to manufacture or market the patented product. Typically, the NPE will send notification letters to a number of alleged infringers, often individual or smaller business entities, in an attempt to collect licensing fees as a form of settlement, banking on the assumption that the alleged infringer will find it cheaper to pay the demanded licensing fee than to fight in court.

Listed below are a few points to keep in mind when dealing with these patent trolls.

  • Receiving the demand.  Take comfort in knowing that you are not alone. The term patent troll has been used for over 20 years to describe NPEs who position themselves to unsuspecting victims to collect patent licensing revenue. These types of cases happen frequently and your business ventures will not cease with the threat of litigation. Lawmakers have instituted new patent laws to make it more challenging for trolls to bring cases against alleged infringers.
  • Survey the scene.  It is helpful to know the composition and history of the matter. What kind of individual or entity is the patent troll? Have they asserted their patent against others?  What has been the outcome? Have lawsuits been filed and how was the case resolved?  A patent attorney will be able to assist you with finding answers to these questions. It is often helpful to know what the usual course of action is for a particular patent troll, what the patent troll ultimately wants, and how the patent troll has resolved similar matters, therefore shedding light on the most efficient way possible to reach resolution.
  • Know your finances.  Often, patent trolls are interested in securing license fee arrangements rather than taking you to court. It is much more cost-effective for patent trolls if they can get you to agree to pay a certain amount of money and move on to their next victim rather than the enduring the enhanced costs of litigation on a victim that does not have deep pockets to pay damages. Therefore, have an idea of a reasonable settlement amount, which may be the less expensive in the long run.
  • Find life lines.  If you’re an individual or small business, determine who else has been sued or contacted by the same patent troll. Evaluate potential joint defense groups or codefendants and determine how they are proceeding with costs and building a case.  Remember, however, that each case should be evaluated on its particular merits and circumstances and that you should not rely entirely on others. Each defendant has its own goals and liabilities.
  • Contact a patent attorney.  Be proactive. The best line of defense is having a strong offense. A patent attorney will be able to assist you with the above-referenced points for consideration. It is necessary to understand your options, whether you actually infringe the asserted patent, whether there are non-infringing avenues available to you so that infringement is not a concern.

Although you may decide to settle rather than fight with a troll, due to financial considerations, options do exist in order to facilitate a smooth and efficient settlement

For more information please contact Pamela K. Riewerts at (410) 583-2400 or