Patent trolls exploit patent law to extract billions from corporations - and
they're getting bolder and more insidious. But there are ways to protect
yourself - including the 'Defensive Patent Aggregator' and 'Patent Alert'
systems like the Illume IP Watching System developed by Filament.
What is a Patent Troll?
A Patent Troll is a non-manufacturing entity that alleges patent infringement by
individuals or corporations who have actually made products and generally
contributed to the modern lifestyle we now enjoy. Why do Patent Trolls do this?
To make money without having to be inventive or get their hands dirty
How to recognise a Patent Troll
Think you might know a Patent Troll but you're not really sure? Here are some
trademark - no pun intended - characteristics:
- Highly litigious
- Abusing the patent system by asserting patents of dubious validity
- Existing solely for the purpose of patent litigation and licensing
- Having no assets other than patents
- Not seeking to develop new technologies
- Seeking outrageous licensing fees by threatening litigation
Who was the first patent troll?
The original patent troll was a patent attorney called Raymond Niro (rhymes with
Biro). In 2001, he represented a company called TechSearch LLC, which alleged
that chip manufacturer Intel was infringing its patents. Intel's Assistant
General Counsel, Peter Detkin, called Niro a 'patent troll' - and it wasn't a
compliment. But it did stick and a new term - and threat - had entered the
How Patent Trolls originally operated
The original tactic of the patent troll was to identify a patent owned by a
small or bankrupt business and buy it, generally at minimal cost. Were they
thinking of exploiting the invention? Yes, but not in the way that the
conceivers of patent legislation intended.
The troll has no intention of pushing the envelope of this technology for the
betterment of humankind. Nor do they - heaven forbid - actually intend making a
product. They simply seek to identify corporations - and the larger and more
successful the better - whose products might be considered to infringe the
patent they have bought.
The patent troll then sends a letter to these 'infringing' corporations and
invites them to avoid the unnecessary expense of a court action by licensing the
technology described (not necessarily claimed) in their patent. Since the cost
of mounting even the simplest defence of a patent action can be $2m, many
corporations will settle out of court. If they don't settle out of court, the
troll commences legal action.
Blackberry brings the Patent Troll out of the shadows
In 2001, NTP, Inc. (NTP) filed a patent suit against Research In Motion (RIM) on
9 wireless email patents. That might not sound significant, until you learn that
RIM makes the Blackberry. The prospect of business executives, professionals and
public servants losing access to email on their 'Crackberry' turned the patent
troll from a little known corporate irritant into a major media player.
In 2003, the district judge ruled in favor of NTP, and entered an injunction
ordering RIM to halt its sales of BlackBerry devices and services in the USA
until the NTP's patents expired in 2012. Ultimately in March 2006, NTP and RIM
announced a settlement in which RIM paid NTP of $612.5 million. Nice 'work' if
you can get it.
The Patent Troll moves into patent marking
The patent troll is getting bolder and colonising new IP territories. One of the
recent trends is for the troll to allege 'Patent Marking' infringements.
This means that they try to find products that bear a patent mark which is in
some way inaccurate. The patent might have expired or might not cover the
product which bears the patent mark. The interesting development here is that
patent troll doesn't need to even bother buying a patent.
Mathew A. Pequignot was the first Patent Troll to exploit this new opportunity
by taking an action against the Solo Cup Company. The suit alleged that some of
the company's lids bore marks for patents which had expired. Pequignot then
filed suits against Gillette and Proctor & Gamble alleging that some of their
razors, anti-perspirants and toothbrushes bore patent marks which did not cover
technology encompassed in the products. He filed a third action against the
Arrow Fastener alleging a series of patent marking infringements involving their
staple guns. None of the actions has been resolved but it's started a new and
disturbing challenge for in-house IP lawyers.
How to defend against the Patent Troll
Patent Trolls have been called 'a tax on innovation' and that's when people are
being polite. They are clearly a serious threat to the modern corporation and
General Counsels ignore them at their peril. Fortunately, you can take steps to
protect yourself against this 'bloodsucking vermin' - one of the less polite
A new venture called RPX Corp represents one response to the patent troll
threat. RPX claims to be a "defensive patent aggregator', buying patents to keep
them out of the hands of patent trolls. Companies pay RPX an annual fee to
license the patents owned by RPX, which pledges never to assert them. Initial
RPX subscribers include Cisco, IBM and Epson.
Intellectual Ventures is another entity founded with similar anti-Patent Troll
intentions, but it has upset some people because it charges patent-license fees
but hasn't ruled out the use of litigation. The founder and vice-chairman of
Intellectual Ventures is a familiar name: Peter Detkin - the man who gave us the
evocative term, 'Patent Troll'.
A simpler response to the Patent Troll threat
A simpler way to defend against the Patent Troll is by conducting ongoing
Freedom to Operate searches. Technology now exists that allows you to monitor
patent activity in your relevant areas and make you aware of potential
infringements and litigants. The Illume IP Watching System developed by Filament is one
of the more advanced ways of maintaining an ongoing Freedom To Operate
Protect or Perish
The Patent Troll isn't going away. They are now established and fortified in the
patent landscape and will continue to frustrate innovation and be the bane of
the General Counsel's life. However, through responses such as the 'Defensive
Patent Aggregator' and Patent Alert Systems like Illume, you can take steps to
limit their effect on your corporation IP affairs.
Contact Filament today to take your next step if reducing you exposure to patent trolls.