Many people are not familiar with the term “patent troll” but everyone should be. This is particularly true if you are starting a business that involves some sort of manufacturing or a unique product. These patent trolls have drained companies and raised consumer price for no reason other than make a quick profit.
The patent trolls
Patent trolls buy up cheap patents for the single use of future litigation. They do this mostly by buying the patents of bankrupt companies that have many of their own patents that they are willing to sell cheaply. The trolls have no intention of making any sort of product using the patents they own, they simply hold them and wait. When they find the right type of company using something only vaguely similar they pounce. But what is the right type of company?
For the patent troll’s game plan to work they are careful in their choice of victims. They want one of two types of start-up companies.
Profitable start ups. If you and your spouse start a company in your attic and it barely makes money, they (the trolls) will leave you alone. You are not worth their time. If you are doing very well it is a different story.
Venture capital-backed start ups. Your company has deep pockets behind it so it is now a target for a troll.
If your company is one of the two types of start-ups above then you could attract a troll. They find a similar patent that they own and sue for infringement. It most likely is not (an infringement) and even less likely that the troll will ever make the product but they are going to be a thrown in your side for a while, all the time they will want to settle the suit. Defend your case will not be cheap. In fact, the starting cost can run into the high six figure. The ending cost, even if you win will be higher.
This, of course, depends on the case going to court. The trolls want you to worry about losing in court and therefore settle before it comes to that. Many times this is just what happens. A company gets extorted out of money.
You always have the option of rolling the dice and going to court. Many times that will be enough to run off a troll. They depend on making money through quick, easy settlements. They really can’t afford a protracted litigation that they might lose. This is made truer because there is a company right down the street that will buckle under the pressure. Like the mafia, the trolls biggest weapon is fear.
To put an end to the trolls something is going to have to happen. Right now it does not seem likely that the government is going to step in so it will be up to the start up owners and their capitalist. As a whole the need to announce that the days of the patents trolls are over and any infringement claim that lack merit will be met with firm resistance. The trolls are in business to make easy money. If that money is no longer easy or very profitable they will just fade away.