Taming the Patent Troll
Tactics for Dealing with a Growing Epidemic
Matthew D. Thayne
October 1, 2008
Dealing with patent trolls is an ever-increasing burden and business expense, particularly in technology-driven indust-ries. Whether your business is a regular target for them, or has avoided a troll attack thus far, there are strategies that will give you a leg up in battling with trolls, and help you avoid dealing with them in the first place.
Trolling for Patents
In its broadest sense, a patent troll is an entity that generates revenue exclusively from enforcing patent rights. It’s possible to operate under this model in an ethical and justifiable manner, and many entities do.
The ugliest of the trolls are those that not only fail to commercialize the technology (the reasons for which may be perfectly legitimate), but also attempt to enforce dubious to baseless infringement claims in the hopes of extracting (some might say extorting) a settlement.
So what can a company do to counter and prevent the assaults of these “true” patent trolls? Take hypothetical company Troll Target, for example, to illustrate some of the tactics a company can use to defend itself from the patent trolls.
Be Diligent and Proactive
Get Product Clearance: Before developing and commercializing a new product, or a new version of an existing product, Troll Target should conduct a patent clearance search and have a patent attorney review the results to ensure that there are no patents that could be legitimately asserted against it. Depending upon the results of the search, Troll Target should also consider obtaining opinions of non-infringement, invalidity and/or unenforceability to protect the company against charges of willful infringement. If it appears that a valid patent would likely be infringed by a new product, Troll Target should either design around the patent or move in another direction.
Be Aware of Known Trolls in Your Industry: In designing its products, Troll Target should also satisfy itself that all patents held by a known patent troll could not be asserted in good faith against its products.
Cooperate With Other Targets
Patent trolls often assert their patents systematically against every significant player in an industry. Consequently, by the time a troll has set its sights on Troll Target, the same troll may have already targeted other companies. Troll Target might be able to obtain information regarding the troll’s behavior, goals, tendencies, weaknesses and characteristics by contacting a former target of the troll.
Since patent trolls typically conduct no business outside of licensing and litigating patents, they are often less concerned than your ordinary plaintiff about the risks of litigation. This lack of concern is heightened by the fact that many patent trolls engage litigation counsel on a contingent-fee basis. There are, however, tactics that Troll Target can employ to give the patent troll a downside to continuing its pursuit of an infringement claim.
Reexamination: Troll Target should consider filing a request for reexamination of the asserted patent(s) with the United States Patent & Trademark Office. Since patents are the lifeblood of a patent troll, the threat of losing its patents, or having them weakened during reexamination, can be a serious threat to a troll. This threat may give the troll a reason to forgo filing an infringement action, or to settle a pending action. Moreover, if a complaint is filed, an early grant of a request for reexamination can be a compelling reason for a court to stay the litigation during the reexamination proceedings.
Sanctions: If the infringement claims brought by a troll are completely baseless, Troll Target may want to consider filing a motion for sanctions. Patent trolls often use the high costs of patent litigation as a motivating factor for forcing early settlement. In fact, patent trolls have been known to structure settlement offers around anticipated litigation costs, rather than around an alleged infringer’s sales figures. The threat of sanctions can be a powerful tool to rein in frivolous infringement claims.
Early Summary Judgment: If the infringement claims are not frivolous, but are nonetheless weak, Troll Target should consider filing an early summary judgment motion. If the rules and practices of the district court allow for such a motion, it can provide an early opportunity for Troll Target to rid itself of the troll, often for substantially less money than what a license to the troll’s patent(s) would cost.
Use Your Rep
Should Troll Target decide to settle because the anticipated litigation costs are higher than the settlement offer, its actions may make it a target for future patent trolls. Patent trolls usually prefer to settle, especially if they have little confidence in the strength of their infringement allegations. As such, they will target companies with a reputation for settling, rather than fighting. Money spent fighting off one troll is therefore likely to be valuable as a “scarecrow” to future trolls. In short, Troll Target’s short term savings by settling with one troll may be outweighed by the costs associated with future troll battles.
Matthew D. Thayne is a patent attorney with Stoel Rives, LLP. He can be reached at 801-578-6924 or firstname.lastname@example.org