In the world of small- and mid-sized businesses, patent trolls are seen as bullies. The term “patent troll” is a derogatory reference to predatory consumers of patents who buy them for no commercial reason, other than to sue those who have independently developed the patented item. This is often devastating for small businesses, as the costs of litigating such frivolous cases can climb quickly. For this reason, patent trolls tend to target small- and mid-sized businesses, knowing that smaller companies could be devastated by a successful lawsuit. Therefore, their goal is to threaten with these suits so that, in one way or another, companies pay them to go away. More than half of patent troll cases hold in favor of the defendant. However, those odds are certainly no guarantee, and the path to an uncertain victory can be costly.
Knowing a Patent Troll When You See One
Patent trolls typically do not create anything themselves. They are organized as companies but rarely carry out any meaningful corporate or commercial operations. Unlike their otherwise legitimate corporate counterparts, they generally do not hold meetings or carry out other businesslike activities. Patent trolls exist solely to buy patents and sue for their infringement, in order to cash in on the lawsuit. They typically seek out patentee-friendly courts that would likely rule in their favor, and sometimes even try to extort “licensing fees” for use of trivial technologies. In short, the broader goal of the patent troll is to use the legal system as a sword to make money at the expense of a new or innovative business.
How to Fight a Patent Troll
If you have been targeted by a potential patent troll, you should immediately discuss the matter with counsel. The process ahead will likely involve collecting and analyzing as much information on the potential patent troll as you can find. You are looking for information on the company’s officers, its location, number of employees, etc. For instance, a potential patent troll may list its only office as a large estate in Florida, show no employees on LinkedIn, and have no company website. Red flags like these should tip you off to the likelihood that you may be in the unfortunate circumstance of dealing with a patent troll.
The next issue to consider is whether you should fight the case or settle. Some companies have found that settling made them the targets of future patent troll suits, while others have found that settling early was cheaper than going to court every time they were targeted by a patent troll. In some instances, fighting cases may have a deterrent effect, yet there is also the risk of losing the case if it goes forward. Obviously, there is no one-size-fits-all solution. Examine the threatening company’s history of patent troll targeting as well as the legal status of your own IP assets to narrow down your options and ultimately determine the most effective route for the business.
Uniting Against A Common Enemy
While small and mid-sized companies are the typical targets for patent trolling, there is strength in numbers. If small companies sue a patent troll together or share information about suspected patent trolls, their threat should shrink. Since patent trolls affect the industry as a whole, companies can unite under a common goal to deter the predatory trolling.
One of the more modern ways to combat patent trolling is crowdsourcing. Target companies can now use third party services that “crowdsource” patent research. Crowdsourcing companies pay part-time contractors to research a given patent. For example, a patent troll’s attempt at a suit can be quickly thwarted if a crowdsourcing company discovers that the troll’s patent isn’t original. Crowdsourced research can uncover the original patent application and prove that the claimant’s so-called patent enforcement is a sham. Crowdsourcing this kind of patent expertise is a useful way for small companies with limited resources to shut down patent trolls.
Companies have also found non-legal approaches toward responding to patent trolls. Some small businesses have found it effective to publicize and spread the word about the alleged patent trolls in local media. There are legal pros and cons to this option, and it should be discussed with counsel before any action is taken. However, spreading the word about specific patent trolls has helped deter their threat. In general, small and mid-sized businesses should be aware of their vulnerabilities to patent trolling. Legal counsel should be consulted before any measures are taken against a patent troll, and the risks of a lawsuit should be carefully weighed. Overall, small- and mid-sized businesses should take advantage of the varying options available for responding to a patent troll. Always consider whether a non-legal option, a crowdsourcing option, or a settlement may be a better alternative to litigation.
Want to learn more about patent trolls and strategies for fighting them? Join us in NYC on Thursday, January 19, 2017 as Priori network attorney Chris Flower leads a breakfast roundtable discussion on patent defense litigation strategies. RSVP here.