Have you heard of Patent Trolls? What they do isn’t illegal, but many consider their actions harmful. In recent years, trolls have turned their attention away from big corporations with deep pockets, and toward small businesses that don’t have the resources for a sustained court fight. Here’s what you need to know.
What are Patent Trolls?
Patent Troll is the term used to describe Patent Assertion Entities (PAEs). PAEs usually generate more than 50% of their gross revenue from patent litigation and are known to:
- Buy a patent from a bankrupt company with the intent of suing competitors.
- Enforce a patent without the intent of manufacturing a product or providing a service based on that patent.
- Pursue baseless patent infringement claims.
A Supreme Court ruling with unintended consequences
Before 2017, PAEs trolled large companies because the law allowed companies to be sued in any state where they do business. A May 2017 U.S. Supreme Court ruling changed all that. In TC Heartland LLC v. Kraft Foods Group Brands LLC , the Supreme Court ruled 8-0 in favor of restricting the available venues for patent litigation claims. Simply put, the ruling said that companies could only be sued in the state where the defendant is incorporated. At the time, the belief was the new law would make it more difficult for PAEs because they could no longer “venue shop” for a state to take their claim to court. Instead, PAEs changed course. They now target smaller entrepreneurs and inventors that have comparatively limited resources. Sadly, it is more cost-effective and less disruptive for the small company to make a one-time payment than to fight the claim.
Steps toward protection
Trolls are pros at what they do. There’s no getting around that. However, there are a few practical ways you can protect yourself:
- Protect your intellectual property. If you have patentable ideas, but they haven’t been patented yet, make sure they are at least in the patent approval process.
- Do your research. A quick search will help you find existing IP protections and tell you if you need to pivot business operations before a lawsuit happens.
- Consider joining an organization that protects against patent trolls. Non-profits like The LOT Network allow companies to come together to form a collaborative, voluntary community to reduce the risk of PAE litigation.
- Have an IP lawyer in your corner. Legal professionals like myself can determine whether a case has any merit. Even if you haven’t been sued by a patent troll, a consultation can help you understand your primary risk factors.
The bottom line:
Patent trolls use the U.S. court system to exploit loopholes and earn money. They are not entrepreneurial inventors like you; they exist to make money from lawsuits. Going up against a patent troll can be daunting and will take up your valuable time and resources. Make sure you are prepared.