The Rise of Patent Trolls: What You Need to Know

Patent trolls, which are mostly private companies, often call themselves patent investors. They claim to be particularly useful to an independent inventor, who would not have the capital or means to defend a patent on his own. A typical patent troll spends most of a company’s costs on obtaining new patents and on litigation costs. In order to protect themselves from patent trolls, some companies have proactively developed strategies to reduce or eliminate contact with the troll.

How do patent trolls make money? You wouldn’t believe how many options they actually have for patent monetization. For example, they use technology licensing from a company. They can also force targets to agree to a settlement, take them to court and sue them for patent infringement, or damage their reputation in the media. So, they use many tactics to fulfill their goal. If you want to protect your business, decide not to fall for such tactics.

What is a patent troll?

This term is used when we are talking about a person or company that has obtained a patent and then uses it in a way that is harmful to the patent composition. A patent troll does not intend to sell or keep a patented product. Instead, it buys large quantities of patents and then sues companies that allegedly infringe on the troll’s rights. The term is now also used to describe entities that purchase patented inventions for the purpose of extracting licensing fees from alleged infringers, rather than for the purpose of actually manufacturing and selling the patented goods. Their presence contributes to the increase of patents of lower quality as well as the payment of large license fees by manufacturers.

How to protect yourself from patent trolls?

Source: inc.com

Unfortunately, there is no law that will keep them away from your company. The only way to prevent damage is to take preventive measures. On the other hand, you are lucky since there are specialized companies that can act as buffer and protect you from bad intentions of patent trolls. If you want to find out more, this website is a place to start. Some common strategies include having your attorney act quickly. You need to take immediate action as soon as you receive a request from a troll. You must also not agree to any licensing offers before consulting an expert about the matter. Finally, consider securing intellectual property for any process you’ve created. You can also use protection against PAEs etc. If the trial board determines that certain products do not infringe the patent, the influence of the patent troll weakens.

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Have you heard of patent watch? Some companies use this strategy to stay abreast of new patent news. This can help you find them before they contact you. Some entities constantly check which patents are filed with the patent board, while others may choose to design their products around products that the troll has already patented. This can have the effect of reducing potential licensing costs. Before developing a new product, companies can also make sure to conduct detailed searches of pending patent applications and currently patented products. It is a way to ensure the uniqueness of the components of their product.

What is the function of trolls?

Source: ucf.edu

So, they obtain patents from individual inventors. They mainly focus on small or bankrupt companies. A group of patent trolls work not only for themselves but also for others. They can be hired by large companies that want to beat their competitors in this way. Since it is a sophisticated fight for market place, this type of trolling is called privateering.

The strategy was created as a special type of piracy. Foreign governments of individual countries fought against enemy merchant and military fleets. Today, this practice is especially related to the markets of telecommunications and the IT sector. Most of the leading companies in these industries are financing a company. Therefore, this term is a popular strategy in the fight of competitors. The target is start-up companies, because they cannot withstand numerous and expensive lawsuits.

What is the function of a patent attorney?

One way for a company to protect itself from the effects of patent trolling is to hire a proper patent attorney. It is a lawyer specializing in this area of law. If you also want to hire one, find a person or company that already has experience in such disputes. Don’t forget that this is a complicated process involving multiple parties, such as insurance and patent protection.

So, with a responsible expert on your side, you can protect yourself from conspiracy. Look for referrals, research multiple candidates and their previous cases and reputation. Don’t forget to check the technical qualifications.

Why are patent trolls dangerous?

They cause huge financial problems. However, not all companies can cope in the same way. That is why the outcomes are often fatal. The reason is expensive licensing fees to patent trolls, bankruptcy filings, and insufficiently strong laws. Although certain states have passed laws against such actions, it is still popular in the US. Businesses are trying to defend themselves by staying away from areas of commerce that interest trolls.

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Can I win a court case against trolls?

Source: verdict.co.uk

There are companies that have emerged victorious from the entire process. For example, this happened in 2013 when one party faced multiple lawsuits. Luckily, she was able to avoid a meltdown by fighting back in court. The result of a job well done is the annulment of all judgments submitted by trolls. So, it is possible.

Legal Reforms

In response to the growing menace of patent trolling, regions across the globe, including the United States, have taken decisive legal action. Recognizing the detrimental impact these entities can have on genuine innovation, lawmakers have introduced reforms aimed at thwarting the tactics of patent trolls. These legal amendments strive to instill a greater degree of transparency in patent litigation processes. For instance, requiring the disclosure of the actual entity benefiting from the patent can help unmask trolls hiding behind shell companies. Such reforms aim to strike a balance—protecting genuine inventors while making it harder for trolls to exploit the system. For those interested in the specifics of these legal reforms, you can check here for a more in-depth analysis.

Impact on Innovation

While at face value, patent trolling might seem like mere legal wrangling, its implications are far-reaching, especially in the realm of innovation. Patent trolls, by their very nature, do not contribute to the advancement of technology or any industry. Instead, they leech off the innovations of others. When companies are embroiled in litigation with these trolls, significant resources—both time and money—are diverted away from research and development. This means that instead of investing in creating the next groundbreaking product or technology, companies are busy defending their current achievements. In essence, patent trolls can effectively stifle the pace of innovation, holding entire industries hostage. For additional info on how patent trolling impacts the broader tech industry, there’s a comprehensive report available.

Benefits of Defensive Patents

Securing intellectual property isn’t solely about protecting an invention or innovation—it can also be a strategic move against potential litigation, specifically from patent trolls. This brings us to the concept of defensive patents. Contrary to what one might expect, companies don’t always acquire patents to actively assert them. Often, they amass patents as a form of deterrence. Just as nations stockpile weapons as a deterrent against potential threats, companies use defensive patents as a safeguard. When a company has a formidable patent portfolio, it can be a deterrent for patent trolls or competitors eyeing aggressive litigation, knowing very well that counter-litigation with a vast array of patents can be detrimental.

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Examples of Successful Defense

While the shadow of patent trolls looms large, it’s not all doom and gloom. Numerous companies and individuals have managed to fend off these entities successfully. For instance, the tech giant Newegg took on a patent troll who claimed rights over an encryption method used in online transactions. Instead of settling, Newegg chose to fight and eventually won, ensuring that the troll couldn’t target other companies with the same claim. Such victories underscore the importance of standing one’s ground and having the right legal counsel. While these battles are neither easy nor cheap, they send a clear message to trolls about the resilience of genuine innovators. Those interested in more success stories can check here for a detailed compilation.

International Perspective

It’s crucial to understand that patent trolling isn’t a phenomenon confined to the borders of a single nation—it’s a global issue. While the U.S. might be at the forefront of patent litigation, similar challenges are cropping up worldwide. Different countries have their unique legal landscapes, but the underlying theme remains the same: opportunistic entities seeking to exploit patent laws for undue gain. As international trade and cooperation expand, understanding the global dimensions of patent trolling becomes crucial for companies operating in multiple jurisdictions. For an exhaustive look into how various nations are grappling with patent trolls, additional info can be found in this global report.

Conclusion

Although you are not in a bad position right now, always be alert. Such scams can also happen to your business. So try not to make frequent mistakes. One of them involves dismissing demand letters and ignoring calls from patent trolls. By behaving like that, you only strengthen their case in the future. It is equally wrong to respond too quickly and harshly. In that case, you will act as an unattractive target. PAEs always take the easy way to make money, so research the buyer carefully before you decide to sell a patent.