New procedures, laws crack down on ‘patent trolls’


Q: There’ve been several stories lately about proposed laws intended to crack down on patent trolls. What is a patent troll?
A: To understand what a patent troll is, it’s best to first understand what a patent really is. Many people think that a patent gives its owner the right to make the invention, but that’s not right. A patent grants its owner the right to “exclude others” from making the invention. Because the patent right is the right to exclude others, a patent owner simply can wait for someone else to make, sell or use the patented invention and then sue that person for patent infringement. A patent troll is someone who does just that.

Q: Why is this such a concern?
A: Some studies have found that patent trolls cost the U.S. economy almost $30 billion a year just in fighting off patent troll lawsuits or paying licensing fees to make the trolls go away. The real rub in all of this is that a significant percentage of that $30 billion goes to fending off lawsuits involving questionable patents.

Q: What do you mean by a “questionable patent?”
A: This is a patent that never should’ve been issued by the Patent and Trademark Office in the first place, like getting a patent for an old method that now makes use of a computer. Others are nothing more than “what if” inventions drawn up long before that particular technology was available. The “scanner patent” is a great example. That patent claimed a system for scanning a document and then emailing the scanned copy. The owner of the patent was sending letters to businesses all over the country and demanding a $1,000 license fee per employee. The irony here is that if you did get sued for infringement of this patent, the court in which the suit was filed would be infringing the patent when it emailed you the complaint.

Q: Where are things heading with patent trolls?
A: Some states, like Vermont, have passed anti-patent trolling laws which lets defendants counter-claim for “bad faith patent assertion.” Others states, like Minnesota, have created settlement procedures in the attorney general’s office for dealing with patents like the scanner patent. The Patent and Trademark Office has implemented certain post-grant procedures as a way to reduce the number of patent lawsuits. Additionally, the Supreme Court recently handed down a ruling in a software patent case, Alice Corp. v. CLS Bank International, which could make it easier for technology companies to mount a defense against method patents.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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