“Patent trolls” take advantage of the relatively easy process for getting a “patent” for inventions in the USA (almost 303,000 issued in 2013, according to the US Patent and Trademark Office, see http://www.uspto.gov/web/offices/ac/ido/oeip/taf/us_stat.htm) and the frequently incomprehensible language of “claims” in the issued patents to suggest that their (often never commercialized) old inventions were the basis for large numbers of modern business methods, like one-click shopping, or podcasts, or wireless networks in coffee shops. (See, e.g., the Electronic Frontier Foundation’s website for sample demand letters and troll trends, https://www.eff.org/issues/resources-patent-troll-victims.)
The litigation business can be very lucrative for a troll, and such companies often buy up some possibly valid patents. They routinely are or partner with contingent fee lawyers, so the “troll” company can send demands, and then the law firm can send threatening letters, and then, if they have a patent that actually relates to what your company does, they can sue. Their price to settle increases with every level of expense and formal process, of course.
So, what can you do if you get a threatening letter? Sometimes, if there is a valid claim, and a patent that clearly applies to your business not much is worth doing besides settling as quickly and cheaply as possible. You can, and should, however, consider the following options:
- Research the patent claim, and the other targets this “troll” may be chasing: One of my clients provided a web service, and one of their customers sent them a copy of a demand letter. We found that several national publications had also been attacked by claims from the “troll” in question, and that several lawsuits were pending on the validity of the patents claimed, with injunctions in some against further claims by the troll. That letter could be ignored.
- Join with the real IP owners to sue the trolls, or to use a litigation protected commerce system: Where “one-click shopping” or podcasts or other routine elements of modern Web commerce are in question, only a few companies (like Amazon, for one-click) may really own the underlying (“base”, as against “utility”) intellectual property, and these sponsors usually both defend their turf and provide methods (like the Amazon system of sales through their website) for other Web and non-Web suppliers to work with them. Trolls hate well hardened targets, and these can be worthwhile, even if they take a share of your sales in licensing deals that include IP defense or transaction fees.
- Join with other IP owners to sue the trolls: There are statutory remedies for the trolls if they win patent cases, but their business is intimidation, not litigation. Where thousands of small businesses are threatened, they can and do get together to resist legal aggression. If the litigation is expensive enough, the trolls may go away.
- Support Patent Reforms: Legislation backed by Google and other business groups passed the US House this December, and might address some patent troll abuses if the Senate and President eventually agree. See http://techcrunch.com/2013/12/05/google-backed-anti-patent-troll-bill-passes-the-house/
Like just about everything else in business, intellectual property analysis and litigation are not without risks. Consult experts in your industry and technologies to see if the patent claims against you are reasonable. Hold your nose and settle, if there aren’t resources enough to fight, and you have more important things to do in your business life. Fight if you must, and if you do, then try to do so with as many allies as possible.