Your intellectual property may be your most valuable resource – so it’s disconcerting, aggravating and a little scary to think that your rights can be challenged by someone who neither creates nor innovates.
However, that’s the reality when you’re up against a “patent troll.” Here’s what you need to know:
Opportunistic acquirers of intellectual property
Officially, patent trolls are known as “patent assertion entities” (PAEs) or “non-practicing entities” (NPEs). These individuals and companies snap up patents with no intention of actually developing or marketing anything. Instead, they turn patents into profit through litigation.
PAEs and NPEs simply sit on what they have until the opportunity comes along that they can use to sue (or threaten to sue) someone else over potential infringement. Patent trolls typically follow a predatory playbook:
- Acquisition: They acquire patents, often in bulk, from bankrupt companies, individual inventors who lack resources or through patent auctions.
- Threats: They send out demand letters asserting infringement claims, demanding licensing fees, and threatening legal action if not complied with.
- Litigation: If targeted businesses refuse to settle, patent trolls initiate costly lawsuits, counting on the expense and uncertainty of litigation to force settlements.
They often target businesses of all sizes, from startups to industry giants, exploiting the complexities and ambiguities in patent law to their advantage.
How do you protect your company from a patent troll?
A multi-faceted approach is often best. You always want to be particularly diligent about your prior art searches when establishing patents, and you should monitor patent filings and acquisitions within your industry to spot trends.
You can also invest in “defensive patenting.” This is where you identify key technologies, innovations and areas critical to your operations. Then, you strategically file patents for these inventions, creating a defensive portfolio. The goal is not to use these patents to assert claims against others but to deter potential litigation and protect against infringement claims brought by third parties. When faced with the threat of litigation, companies with strong defensive patent portfolios can assert counterclaims – and that can make you too expensive to litigate against. This can effectively discourage patent trolls from targeting your company in the first place.
Patent law is exceedingly complex, and it pays to have experienced legal guidance behind you when you want to protect what’s yours.