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Davis Brown Intellectual Property Law Blog 


What is a Patent Troll and Why are you Always Hearing about Them? - February 16, 2016

The term “Patent Troll” has been around for a long time. According to the Wikipedia page for “Patent Troll,” it was first used in 1993 to describe countries that file aggressive patent lawsuits. Though there are a variety of definitions for a patent troll, in this post, a patent troll refers to an individual or company that aggressively attempts to enforce questionable patent rights against accused infringers that are far beyond the patent’s actual value or the scope of the underlying rights. To put it another way, a patent troll is someone who uses tenuous patent rights and aggressive litigation tactics to threaten other individuals or companies as infringing on the patent in an attempt to get a monetary settlement

 

Not many people are aware, but the term patent troll is actually a controversial term because, under some definitions, the term includes other entities that do not necessarily practice aggressive litigation tactics. For instance, one of the main indicators that you are dealing with a patent troll is that the patent is owned by a company that doesn’t actually practice the patented invention. Under this definition, many non-practicing entities (“NPE”) fall into this category. An NPE can be an individual inventor of a patent—someone who has developed but does not have the means to commercialize

Troll

the invention—or it can be a university which develops technology and uses licensing programs to commercialize the invention. In most instances, these NPEs do not participate in the aggressive litigation tactics that are characteristic for true patent trolls. For instance, most universities and their respective licensing centers are considered NPEs, since they commercialize patents through the use of licensing programs, and do not actually—at least most times—use the patented invention themselves. However, universities and their licensing centers are not considered patent trolls because they generally do not partake in aggressive litigation tactics.

 

So why are patent trolls such a hot topic right now?

In recent years, there has been an upward trend in patent litigation initiated by patent trolls. Typically a patent troll will send out hundreds of demand letters that give the alleged infringing entity two choices: either defend a patent lawsuit—which typically can cost upwards of one million dollars—or pay some sort of royalty/licensing fee to make the situation go away. In an attempt to address the consequences of this, members of congress have proposed several bills in an effort to dissuade patent trolls from filing frivolous lawsuits. Though many of these proposals have not made it into law, at least there is some effort to help protect people and businesses from patent trolls.