Patent troll is a term used for a person or company who enforces patents against one or more alleged infringers in a manner considered aggressive or opportunistic with no intention to manufacture or market the patented invention.
Patent troll
Patent trolls operate much like any other company that is protecting and aggressively exploiting a patent portfolio. However, their focus is on obtaining additional money from existing uses, not from seeking out new applications for the technology. They monitor the market for possibly infringing technologies by watching popular products, news coverage and analysis. They also review published patent applications for signs that another company is developing infringing technology, possibly unaware of their own patents. They then develop a plan for how to proceed. They may start by suing a particularly vulnerable company that has much to lose, or little money to defend itself, hoping that an early victory or settlement will establish a precedent to encourage other peer companies to acquiesce to licenses. Alternately they may attack an entire industry at once, hoping to overwhelm it.
Patent troll companies have no interest in using the patents… but instead hope to reap large sums of money from the lawsuits themselves. This gives them an advantage over manufacturers since they are relatively immune to the typical defensive tactic large entities use against small patent plaintiffs, because the cost of litigation tends to fall more heavily on an accused infringer than on a plaintiff with a contingency-fee lawyer, and because trolls have an almost-unrestricted ability to choose their preferred plaintiff-friendly forums.
Economic losses to a country
A patent litigation costs an infringer $2 million and takes about two years. This whole burden is on the infringer because whenever a patent troll sues a company than the sole burden of proving lies on the infringer to prove that they are not infringing plaintiff’s patents.
In 2011 patent trolls cost US bodies direct costs totaling 29 billion dollars in the United States alone. A core criticism of patent trolls is that “they are in a position to negotiate licensing fees that are grossly out of alignment with their contribution to the alleged infringer’s product or service”, notwithstanding their non-practising status or the possible weakness of their patent claims. The risk of paying high prices for after-the-fact licensing of patents they were not aware of, and the costs for extra vigilance for competing patents that might have been issued, in turn increases the costs and risks of manufacturing.
Case Study
There was a lawsuit in January 2011 where Gooseberry Natural Resources LLC sued Fark.com, Yahoo, Geeknet, AOL, Reddit and Tech crunch etc for violating their Patent no. 6370535 entitled ‘System and method for structured news release generation and distribution’.
The invention underlying the patent appears to be the notion of typing text into an admin system, storing that text on a server, and then publishing it on the Internet.
Yahoo and other companies settled out of the court but Fark.com didn’t settled out and when Gooseberry Natural Resources LLC called Drew Curtis(founder of Fark.com) to settle out of court than Drew Curtis made an offer of Zero $ which was readily accepted by the company. This shows that these patent trolls are too harmful for the economy of a company.
In an interview to Ted.com, Curtis said that these patent trolls pose a bigger threat to the economy than terrorists. He even showed a figure that showed that $500 billion were lost in lawsuits related to patents whereas $123 billion were needed to fight terrorists in US. He gave three points to fight patent trolls:
1. Don’t fight the patent, fight the infringement because its too hard to overturn a patent but its a lot easier to disapprove an infringement.
2. An infringing company must make it clear that they don’t have any money at all or they are more interested in spending the money on the attorney fighting the case in place of giving them the money.
3. Last and the least point is that the infringer should convey to the plaintiff that they will make this process as annoying as possible and as difficult as possible for them.
Conclusion
In the recent past it has been seen that many companies have emerged as patent trolls who tend to buy patents from dieng companies and than use them to sue other companies who are working on the same technology. Patent troll companies have no intentions to manufacture the products claimed in the patent or make the use of process claimed. Patent troll companies are a threat to the economy as well as new innovators because these trolls attack the manufacturer when they are about to bring out their product in the market. This gives patent trolls the advantage of settling out the dispute out of the court and get huge amount from the company. Thus from the above case its clear that an infringer better fight the case in place of settling out of the court.
