Businesses Beware of Patent Trolls - Know What to Do if One Contacts You
Posted: November 10, 2013
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Photo: DM7 Gigacom.com[/caption]The letters are surprising and threatening. They inform you your business has infringed on a patent and demand payment of royalties for the infringement. Infirngement fees demanded are $25,000 and higher, and often the fees double if they're not paid in a short time frame, often 30 days. If you don't pay, the letter promises a lawsuit.
[caption id="attachment_11637" align="alignleft" width="500"]Photo: DM7 Gigacom.com[/caption]The letters are surprising and threatening. They inform you your business has infringed on a patent and demand payment of royalties for the infringement. Infirngement fees demanded are $25,000 and higher, and often the fees double if they're not paid in a short time frame, often 30 days. If you don't pay, the letter promises a lawsuit.
LegalZoom.com says, "If you’ve ever known anyone who’s lived that nightmare most likely they were the unfortunate victim of a patent troll, sometimes called a non-practicing entity or NPE."
An NPE is an individual or company that acquires patent rights for innovations developed by others. They buy business method patents or other active patents solely for the purpose of filing claims against unwitting infringers. They do not actually produce products themselves.
Most victims have two choices, pay the claim or fight it in court. Many simply pay up, as the threat of a lawsuit and costly court battle are beyond their financial reach.
Legislation Proposed
House Judiciary Committee Chairman, Rep. Bob Goodlatte (R-VA), recently (Oct. 2013) introduced a bill directly attacking the business model of patent trolls. In addition, Sen. Claire McCaskill (D-MO) convened a meeting of the Senate Commerce Committee (Nov. 2013) to investigate what, if anything, could be done to stop the patent threat letters, from a consumer protection standpoint.
Read more about Patent Trolls and Legislation to Stop Them
Patent Trolls and Their Impact, LegalZoom.com
Senator Wants End to Demand Letters from Bottom Feeder Patent Trolls, ArsTechnicia.com
Challenges of Defining a Patent Troll, BloombergLaw.com
Congress should avoid knee-jerk reactions to patent trolls, Cnet.com, by Bernard J. Knight Jr. is the former General Counsel for the US Patent and Trademark Office where he served from 2010 to 2013.