The truth about patent trolls

A patent troll is in the field of intellectual property, and more specifically in licensing. It is the name given to a company or a natural person whose main economic activity is the litigation of licenses and patents. The name patent troll was used in 1993 to describe companies that file multiple patent infringement litigation cases. The term was popularized by Peter Detkin in 2001 when he was working for Intel.

This type of company is more commonly known as a Non Practiting Entity (NPE), since its main characteristic is not to produce any goods or services. This model is similar to blackmail: the company acquires one or more patents in the technical field that it does not operate by itself. Then he seeks to contract operating licenses of his stock ownership of companies that produce the goods or services, threatening court summons for infringement of said patents. This action is often based on disputed patents whose legal force is weak. Therefore, a significant portion of litigation involving patent trolls is based on software patents or business method patents. Your targets can be both large companies and small technology companies that cannot raise the necessary funds for a trial.

Companies often pay the troll because, at worst, the company is prohibited from using the technology claimed in the patent, and at best, the legal costs are well above what the troll is asking for, even if the case is won. . The activity of the trolls is limited to the acquisition, valuation and sale of patents.

A troll can also be paid to protect a company against another patent troll. If another patent troll sues the company, the Patent Troll protector will fight back against this patent troll with the use of other patents. Patent trolls agree to amicably resolve this type of situation.

Please note that more and more manufacturing companies are using NPE’s services to aggressively develop their patent portfolios while simultaneously cross-licensing portfolios held by NPE.

In 2006, RIM, the maker of BlackBerry mobile phones, paid $612.5 million to NTP to stop litigation in US courts. Although this practice is still largely concentrated in the US, it is already happening in Europe, as evidenced by Nokia and HTC’s dispute with IPCom.

To combat this abuse, a global reflection on the purpose and function of patent law as it is perceived today seems necessary. The activity of patent trolls can restore a balance of power between individual inventors and large groups against which they would otherwise have no defense against infringement. The average cost of an infringement lawsuit has reached hundreds of thousands of dollars.

Troll strategies are legal. It is the only right available to any owner seeking to assert an operating monopoly that is conferred by obtaining a patent. The NPE definition could apply to many groups, including IBM. This company sells patent licenses in a technical field that it does not operate on its own.

The current reform of patent law in the United States raises a debate about the role of these practices. The Obama administration has launched a first series of strong measures capable of limiting the power of patent trolls. Among the barriers, one in particular should compel disclosure to the court of all persons or entities that may have a financial interest in the complaint. For the Obama administration, the measures have very clear objectives to increase the functional costs of patent trolls, since the work prior to the judicial process would be much more important.