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Do You Need to Worry About Patent Trolls?

Posted by Wayne Harper | Nov 12, 2016 | 0 Comments

It seems like 1 out of every 4 stories about patents in the press these days is about patent trolls.

If you are not familiar with what patent trolls are, they are a type of entity more formally referred to as Non-Practicing Entities (NPEs). NPEs own patents, often hundreds or thousand of them, but do not make, use, sell or import the invention described in the patent applications.

NPEs principally make money with patents by licensing patents or portfoilios of patents to third-parties or suing third-parties who are making, using, selling or importing the invention described in one or more patents owned by the NPEs. NPEs can also make money with by selling patents they own, or using the patents as collateral for raising funds for other purposes. NPEs are usually described as patent trolls when the NPEs file or threatens to file many, oftentimes questionable, lawsuits for infringement of patents the NPE holds.

The NPEs generally expect the entities they are suing or threatening to sue to settle the case quickly. The simple fact is that patent litigation is so expensive, individuals and small companies, sometimes even medium sized and some large companies, simply can't bear the cost of litigation. Its not uncommon that the costs of defending against a patent infringement suit can run hundreds of thousands or even millions of dollars. Patent infringement suits that actually go all the way to trial are typically contests between multibillion dollar companies.

Could or your company end up in the sights of a patent troll? It's always possible, although you may want to bear in mind the trolls are typically looking for big game, entities that can and will pay out a sizable chunk of change to avoid being sued, that may be willing to pay sizable licensing fees, or that could pay a large judgment.

If you are threatened by a patent troll, one strategy could be to simply stop what ever activity the troll claims is infringing, notify the troll you have stopped the allegedly infringing activity, and refuse to pay the troll's legal fees or any alleged damages or profits you made from the allegedly infringing activity.

That puts the troll in the position of having to file suit against you, and if you or your company has limited assets or revenue, its probably not worth their while to sue you. Its something of a poker game, of course, and you can expect multiple threats. You could offer to pay their legal fees to date just to shu them up, but its your choice.

If ceasing the allegedly infringing activity puts you out of business, then you may have to choose between the risk of litigation and staying in business – a painful choice to say the least. If the troll's claims of infringement are a real stretch, you could call their bluff. If it's a close call, on the other hand, you might inquire as to the possibility of a licensing agreement. Getting professional help is highly recommended.

If you have any questions, feel free to contact me.

About the Author

Wayne Harper

Harper IP Law, PA is the solo law practice of Wayne V. Harper. Before entering the practice of law, I worked for 18 years as an information technology professional with a wide array of corporations in retail and financial services industry, serving as a programmer, systems analyst, systems architect and director of software development, among other things. Since 2004 I've been advising businesses ranging from newly-formed companies to large publicly-held companies on a variety of intellectual property matters. I enjoy practicing intellectual property law and helping clients — both large and small — succeed. Here's how I typically serve clients. I offer patent services, trademark services, copyright services, software intellectual property services, and litigation services. Please take a look at any of my service offerings that may be of interest to you, or … Call Us Now!

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