Patent Troll

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 themselves.

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 patent landscape.

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 perspectives.

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 assement.

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.

Decrease your exposure to Patent Trolls