If you have a patent or are considering securing patent protection for a new invention, then one of the things that you need to be aware of is patent trolls.
What is a patent troll? How can they affect you and your patent rights? Inventors with these and other questions are encouraged to schedule a consultation with a Texas patent attorney to discuss pursuing a patent and protecting their rights.
What Are Patent Trolls?
You may hear patent trolls referred to as “non-practicing entities,” or NPEs. A patent troll is an individual or entity that uses legal means to enforce patent rights against individuals or entities that they claim are infringing their patent rights. The troll is trying to collect licensing fees on the patents they own, but trolls don’t build, make or sell anything. Their practice is to obtain or buy patents and then demand that any companies using related technology pay them fees. Accordingly, you could see the work of the patent troll as a form of legalized extortion.
Because of patent troll activity, manufacturers and inventors end up wasting all sorts of time and money defending their rights in patent infringement lawsuits. Sometimes, they conclude that it just makes sense to pay licensing fees to the patent troll rather than fight them.
What Do Patent Trolls Do?
An ordinary company that holds one or more patents usually spends their time and resources manufacturing a product or offering a service. They also likely perform research, looking for new applications and new technology.
Things are really different at an NPE. They spend virtually all of their time and resources in protecting their patent portfolio. However, they are not doing so in order to prevent others from profiting from their exclusive technology that they are using on a product or service. They don’t offer products or services at all. They are only monitoring the marketplace for any technology that might infringe one of their patents. Patent applications that are published by the U.S. Patent and Trademark Office are a great place for patent trolls to look for emerging technology.
That’s because patent trolls prefer to exploit new or otherwise vulnerable companies or individuals who don’t have much in the way of resources to defend themselves. The patent troll is hoping for an early, easy victory that will give them a settlement and probably even induce other companies to do the same.
Because patent trolls do not make, sell or import anything, they are not vulnerable to a counter-assertion that they are actually infringing on the other company’s technology. Patent litigation already is costly and complicated. Without the ability to make this counter-assertion, it can be almost impossible for the patent troll’s victim to prevail.
Patent Trolls in Action
Here’s one example of how patent trolls work. A company called Lodsys is an obvious NPE. They don’t make or sell anything. However, they do engage in lawsuit after lawsuit, each one alleging patent infringement by another entity.
Lodsys appears to specialize in exploiting small app developers. They see a new app come on the market, and they quickly move in with a lawsuit, claiming that the in-app purchasing technology used in the app infringes on one or more of Lodsys’ patents. Both Apple and Google are trying to intervene in some of these lawsuits, but these will take years to resolve.
Consider also the many lawsuits that have been filed by Shipping & Transit LLC. In 2016, this company filed more patent lawsuits in the U.S. than any other. They sue 100 or more small companies each year, claiming that the technology that allows these companies to send tracking numbers to customers is exclusively owned by them via patents that they hold. Many overwhelmed small companies don’t even know how to begin protecting themselves or fighting back.
Mistakes to Avoid
Patent trolls usually make themselves known through a demand or cease-and-desist letter. The worst thing that the recipient of that letter can do is to ignore it. The better choice by far is to consult with a patent attorney so that an appropriate response can be made. Choosing not to respond only strengthens the patent troll’s case down the road.
Plus, if the patent troll receives a strongly worded, immediate response from an attorney, they are likely to just drop their demand. That’s because patent trolls prefer an easier route to collect money. If they encounter swift, decisive resistance, they’ll go looking for victims who are not defending themselves as well.
Can You Protect Yourself Against Patent Trolls?
Patent trolls always bet that their victims won’t know how to react to a demand letter. All too often, people simply throw these letters away, figuring that they are junk mail. Consulting with a Texas patent attorney is the smarter option.
If you are considering entering into a licensing agreement with any entity or individual, proceed with caution. Have a trusted intellectual property lawyer review the terms of the licensing agreement to ensure that it is fair, balanced and appropriate.
Contact the Jeff Williams Law Office today to find out more about how to protect yourself from patent trolls.