Patent Trolling

Introduction

A patent is an exclusive right that is granted to an inventor for a specified number of years to make, use, and sell an invention. Once the right s provided, no other person can use the invention without proper license from the patentee. This right is provided to protect such inventors legally from any harm. Later it is usually expected that the inventor will put it in the consumer market for use by licensing it to various other manufacturers. But recently, many such inventors have been misusing such rights that are provided to them. Recently, many have been patenting items in the vaguest form that the legal system would allow, without the intention of using the patent in the future. Their aim is usually to get money by filing infringement suits against individuals or companies who are using products that is even remotely similar to their patented product. This practice is referred to as patent trolling. Thus, patent trolling can be defined as a practice of obtaining and using patents for licensing or litigation purposes rather than in production of one’s own goods or services; “its real business model is patent trolling.”

Analysis

These patent trollers are usually referred to as Non Performing Entities (NPE). These entities will not sell or produce their product but will rather just license money out of those who appear to have been infringing upon a patent that the NPE owns. Trolling had been becoming a very serious problem, where the small companies, enterprises and individuals had been facing most of the backlash due to the high number of cases being filed against them. Many companies settle as the risk of losing an infringement suit and paying millions of dollars is very risky, even if they don’t believe there is any sort of infringement. The act is more prevalent in USA than in Europe as Europe follows the policy ‘losers pay’ where the losing party has to bear the costs of both the sides. This deters people from filing false cases but this isn’t the case in USA. But in the recent case of TC Heartland LLC v. Kraft Foods Group Brands LLC the Supreme Court has given a very welcoming decision where the court said that patent case defendants could effectively be sued anywhere they do business. In the present case, the defendant weren’t allowed to shift the case to where its company was based but was not allowed by the lower courts, which were following a 1990 precedent from the U.S. Court of Appeals for the Federal Circuit. This decision brings a sigh of relief to many as many cases can now be moved away from ‘plaintiff-friendly’ districts to much more neutral districts where the defendants stand a chance of having a fairer outcome.

Strategies and Measures

The NPEs used a lot of different strategies to gain what they have been looking for. Some of the following measures are the most popular ones:

  1. They accumulate patents related to one area: The NPEs collect a number of patents related to one area which makes it nearly impossible and very expensive for the targeted company to come out of the infringement suit.
  2. They do not produce any product: The patent trollers never produce the product they have patented. This in turns makes it difficult to file a counter sue claim of infringement for the defendant. For example in a technological dispute.
  3. They sue a large number of defendants together: This strategy reduces their overall cost and given them the hope of a large payoff in the future.
  4. They claim a percent of the total revenue from the product:Even though their patent may cover a small aspect of the technology, the award granted can amount to millions for a successful product.

Thus, corporations have been asking for special laws or certain measures to be taken against such companies in order to avoid such suits and large amount of awards granted to them. Here are a few steps that companies can take against such troll patents:

  1. The Big Tent Coalition: The current laws allow even the users of a product, which is an infringement of a patent violation to be sued. The Bill will change that and later only legal action could be taken by the company or the individual who has created the product or service.
  2. How to prepare against such suits: One can always take certain precautionary measures to be safe against such frivolous suits. A company or an individual must always remember these thee simple steps before it opens its doors to others- be proactive, Insure, Ask an attorney.
  3. Giving proper Response: Response to a notice must always be made to the sender of the notice. Looking for ways to settle outside of courts could be a waste of time as the plaintiff already knows about such settlements.

Conclusion

Everyone is very much aware as to such troll patents but is still very far away from assessing them. The simple logic that everyone seems to follow is that everyone has a right to protect their patent even if they aren’t using them. It is simply seen as a way of doing business as it is a very common occurrence among big corporations. But the ones who are affected the most, the small companies and individuals need to be protected against such patent trollers as they face losses which takes years to overcome and even leaves them bankrupt. These NPEs target such companies who will very easily give into their demands looking at the vulnerable position that they are in and this is the reason that such vulnerable companies require protection.

Author: Nishka Tyagi, Intern at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at swapnils@khuranaandkhurana.com.

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