Outside Consultant: Dealing with patent trolls

  • Updated: December 22, 2013 - 12:56 PM

Susan J. Marsnik

Question

What are your answers, recommendations and suggestions dealing with “patent trolls”? What should a company do that has been attacked by these patent trolls?

Ed McMasters, Director of Marketing and Communications, Flottman Co. Inc., www.flottmanco.com

 

Answer

I am assuming that when you say “attacked” by a patent troll that you have been served with a summons and complaint in a patent infringement action. Since you have a very short time to respond, my best advice is to contact your lawyer immediately.

For those who are unfamiliar with the terms “patent troll” or “patent assertion entities” (PAEs), these are companies that have purchased patent portfolios with no intention of producing the inventions they own. Rather, their business model is based on filing federal patent infringement lawsuits against companies like yours in the hopes of extracting a sizable licensing fee in exchange for dismissing the lawsuit.

A recent study found that a troll will typically dismiss a party from a lawsuit for a licensing fee of $100,000 to $300,000. Fighting a troll in court is an expensive and risky proposition, even if the patents are weak or dubious. Patent lawsuits can cost millions of dollars. Litigating and losing may be far worse than paying the troll’s demand for a license.

A court case could bankrupt a smaller company or lead to damages and an injunction that could shut down the business. Although it is hardly an ideal, often the victims of a troll accept the license fee and pass the cost on to consumers.

The new patent law, the America Invents Act, ushered in many changes to the law including a new “inter partes’’ review. It gives a party who has been attacked an administrative trial proceeding at the U.S. Patent and Trademark Office in which the validity of a patent can be challenged. Although the inter partes review is much less costly than a trial, it is still expensive and there are still risks. My best advice is to contact a patent attorney specializing in your technology to review your options.

About the author: Susan J. Marsnik, professor, Department of Ethics & Business Law

  • get related content delivered to your inbox

  • manage my email subscriptions

ADVERTISEMENT

Connect with twitterConnect with facebookConnect with Google+Connect with PinterestConnect with PinterestConnect with RssfeedConnect with email newsletters

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

 
Close