What is a patent troll?
Patent trolls are “non-practicing entities” or NPEs. They don’t produce their own goods or services. In many cases, patent trolls are individuals and organizations who buy patents from others and sue other companies over patent infringement. However, some patent “trolls” are actually universities, hospitals and research organizations, who rely on being treated fairly by companies that use their ideas.
The most controversial patent trolls follow a simple process. They contact failing companies to buy their patents. These businesses sell their patents to generate revenue. Once patents are secured, the patent trolls find others who might use a similar process or design, like the patent that they just acquired. They then contact these other companies, threatening them with a lawsuit over patent infringement.
Because patent infringement lawsuits are costly, it is cheaper to settle out of court by paying patent licensing fees. These fees are still less than the cost of a lawsuit.
However, the operations of patent trolls increase the value of all patents. For example, startups who file for patents reassure their investors. Even if the startup fails, the patents can still be sold to pay back the investors. And when the “trolls” are universities, a patent infringement lawsuit may be the only way for the university to protect its professors’ ideas and defend themselves from companies unfairly stealing these ideas.
There is no clear strategy on how to defend yourself against patent trolls. Always consult a patent attorney when you get targeted by a patent troll, or any patent owner alleging patent infringement.
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