Patent litigation filed by non-practicing entities, or “patent trolls,” has proliferated in recent years. The business model of the typical patent troll focuses on acquiring, licensing and litigating patents, most commonly against technology-based companies. Defendants in such suits face unique challenges, as most patent trolls do not sell products, provide services or engage in traditional business activities related to their patents. Hence the plaintiff-trolls are not subject to counterclaims often available to standard patent litigation defendants, such as patent infringement, unfair competition, and antitrust claims.
Recently, patent trolls have expanded their targeting to include traditional brick and mortar businesses like hotels and restaurants that do not make or sell the allegedly infringing products. Instead, these companies simply use the products in conducting their business or providing services to guests and customers. Additionally, in most cases these companies acquired the products from third parties, and thus have no or limited knowledge of the underlying technology that is alleged to infringe.
Unfortunately for many of the brick and mortar businesses accused of infringement, patent litigation is unfamiliar territory. Upon receiving a cease and desist letter the business must quickly decide whether to fight the claim or pay a substantial license fee.
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