Patent Troll – Definition

Cite this article as:"Patent Troll – Definition," in The Business Professor, updated September 30, 2019, last accessed May 25, 2020, https://thebusinessprofessor.com/lesson/patent-troll-definition/.

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Patent Troll Definition

patent troll is a company or a person that buys patents from insolvent and financially unstable companies so that they can benefit by charging licensing fees on the patent infringers. The patent trolls often have no intention of selling or inventing the products after buying the patents, but they want to make money out of the infringement claims.

Patent trolls are also referred to as ‘non-practicing entities’ because they never produce anything after all. A person who has the intention of patenting their inventions need to be aware of patent trolls so that they can protect themselves.

A Little More on What is a Patent Troll

Patent trolls make use of patents as legal securities, instead of bringing up new ideas or products in the market. The main business of the trolls involves buying patents from failing companies and then using them as business threats later. The patent office is never keen when issuing the patents, as they may approve basic ideas that cover basic everyday operations that do not need patenting.

With the overbroad coverage in patenting, the trolls then threaten anyone who infringes any of their ideas in the patents. Unless the infringer pays a licensing fee which usually amounts to thousands of dollars, the trolls may take legal action.

Most of the time, the infringement claims are false, and the products did not infringe on any patent law. The legal suits that the trolls file against the patent infringers are often very high. Therefore, the infringers usually prefer paying the licensing fee than to face a lawsuit. Patent troll’s main target is start-ups, small companies, or entrepreneurs, who can barely afford the legal charges in courts. After they pay the licensing fees with their little money, they are unable to create new products, and this hinders their growth.

 The Law on Patent Trolls

Although patent trolling seems like an illegitimate practice, the law allows patent trolling. Patent trolls hang on the law because the law gives them the right to seek justice from any infringement of the patent. A person who owns a patent has the legal right to file charges against the person infringing their patent.

Patent trolls are a hit in the United States since the exploitation of structural matters within the patents, and court systems are much easier. In June 2013, President Obama addressed the issue of patent trolls saying: “The trolling companies do not create a new product, they are trying to hijack, and leverage other people’s ideas and concepts to find out whether they can get money out of these ideas.”

However, in Europe, patent trolls are not a big problem because many countries in Europe demand that the loser in court pays the legal charges of both parties. This practice eliminates the majority of the infringement claims in court.

Patent Troll Practices

The patenting trolling methods are many, and it may be difficult to explain all of them. Patenting practices include the following:

A patent company purchasing a patent from a bankrupt company, so that it can prosecute its competitors for infringing the new patent.

Taking baseless infringement claims to court, causing the competitors to lag in their development.

Example of Patent Trolling

In 2018, a federal court in Texas ordered the Apple Company to pay $502 million to Virnetx, a patent troll. VirnetX is a company known for prosecuting other companies that develop products based on infringement laws. The two companies have had a legal battle for over 8 years over iMessage and FaceTime. VirnetX claimed that Apple had infringed four of its internet-based communication patents. The battle involved several appeals and lawsuits until when the court ordered Apple to pay up.

How to Deal with Patent Trolls

There are several ways in which business owners and entrepreneurs can deal with patent trolling;

  • Use online resources

Patent lawsuits can be very exhausting, expensive, and lengthy. Nevertheless, there exists a lot of online tools that can help entrepreneurs deal with patent trolls. The USPTO website provides information on the action one can take in case of an infringement notice. One can also deal with patent trolls by finding previous legal actions on trolls and posting it online to scare the trolls.

  • Team up with companies

License on Transfer is another network that includes companies coming together to fight patent trolls. The group of companies grants each other licenses to patents of their companies to use. So, when one company goes bankrupt, and the patent trolling company buys it, they will find the licenses already in use.

  • Expose the patent troll

The main aim of trolling is to make money, which means that the trolling company does not want to be in the spotlight. The business owner may decide to publish a blog post, post on social media, or issue a press release to let the world know about the patent trolling company. By doing this, you might gain support from a lot of which and in the end, discourage the troll.

  • Do not be quick to settle

In case the business owner is sure that the allegations are false, then they shouldn’t settle too fast. A quick settlement would only lead more trolls their way. Keep pushing through the lawsuits even though it can be frustrating, but it will eventually keep the trolls away. The business owner should search for any contradictions in the patent that can help prove that the claims are false in court.

Conclusion

Patent trolls can pose a significant amount of danger to a business owner or an individual entrepreneur. Learning about the patent trolls and how to deal with them contributes to the overall success of the business. The business owners can also consult with the attorneys at the patent offices to get information on how to protect their intellectual property.

References for “Patent Troll

https://www.investopedia.com/terms/p/patent-troll.asp

www.businessdictionary.com/definition/patent-troll.html

https://www.techopedia.com/definition/28564/patent-troll

https://www.hg.org/legal-articles/what-is-a-patent-troll-31750

https://investinganswers.com/dictionary/p/patent-troll

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