What Are Patent Trolls and How Can I Protect Myself Against Them?

Patents serve to protect innovations and ensure that inventors or companies are rightfully compensated for their intellectual property (IP). However, not everyone who holds a patent intends to use it for productive purposes. In fact, some individuals or companies exploit patent rights purely for financial gain without contributing anything meaningful to society. These bad actors are often referred to as “patent trolls.” Read on and contact a New Orleans, Louisiana patent lawyer from Lemler IP to learn more about these individuals, how they can impact your business, and how you can protect yourself from them. Here are some of the questions you may have:

What Are Patent Trolls?

Patent trolls, also known as non-practicing entities (NPEs), are individuals or companies that purchase patents, not to manufacture or innovate, but to profit by forcing an innovator to license the patent’s technology from them and/or suing others for infringement. These entities don’t produce products or offer services related to the patents they hold. Instead, they make their money by threatening legal action against businesses that allegedly infringe on their patents. In many cases, patent trolls rely on the high cost of litigation to push companies into settling for large sums of money or entering into non-favorable licensing agreements, even if the patent claims are weak or frivolous.

Often, small businesses or startups become the primary targets of these patent trolls because they may lack the financial resources to fight lengthy court battles. It’s a frustrating situation for companies that are focused on innovation and growth. Patent trolls exploit loopholes in the system and use fear tactics to extract settlements, knowing full well that most businesses would rather pay a fee than endure costly legal proceedings.

How Do Patent Trolls Operate?

Patent trolls usually begin by identifying companies that are using or developing technologies covered by their purchased patents. These technologies are often broad and vague, allowing the troll to claim infringement across a wide range of industries. Once they believe they have a case, they send a demand letter to the alleged infringer. The letter typically threatens a lawsuit unless the company agrees to pay a licensing fee or settle out of court.

This tactic is especially dangerous for small businesses, which might not have the resources to engage in a prolonged legal fight. Patent trolls know this and use the threat of high legal fees and court costs to push companies into paying settlements, even if the infringement claim is unfounded.

While the demand letter may seem intimidating, it is important to remember that not all claims are valid. Patent trolls rely on intimidation and uncertainty, so knowing how to respond can make all the difference.

How Can I Protect Myself Against Them?

There are several steps you can take to protect yourself or your business from patent trolls. First, it’s critical to consult with an experienced IP attorney who can help you assess any potential risks, evaluate demand letters, and determine the best course of action.

Next, consider conducting a thorough review of your individual or your company’s intellectual property and ensuring that your own patents are well-documented and defensible. This proactive approach can prevent patent trolls from targeting your business, as they often prey on businesses with weak or poorly defined IP strategies.

Additionally, some companies opt for patent insurance, which can cover legal costs associated with defending against patent infringement claims. While this may seem like an extra expense, it could be invaluable if you find yourself facing a lawsuit from a patent troll.

Finally, if you do receive a demand letter, don’t panic. Speak with a qualified attorney before making any decisions or responding. An attorney can help you determine whether the claim is legitimate and guide you through the next steps. Ignoring the letter could lead to more severe consequences, but paying a settlement without legal counsel could set a costly precedent and inevitably cause you and/or your company financial harm.