What is a 'Patent Troll'

A patent troll is a derogatory term used to describe the use of patent infringement claims to win court judgments for profit or to stifle competition. The term may be used to describe a number of activities that utilize patents and the court system to earn money. While the practice of patent trolling is not illegal, a patent troll has no intent of ever developing a product or service by utilizing a patent. The end result is bad faith infringement threats and licensing demands that cost companies significant money to litigate or settle without any addition to the public good. A patent troll may also be known as a "patent shark," "dealer," "marketer" or "pirate." A patent troll operation may be called a "patent assertion company" or "entity" or a "non-manufacturing patentee."

Breaking Down 'Patent Troll'

A patent troll may work a variety of ways, though each positions patent ownership as a way to generate revenue without producing any material benefits by using the patent in question. A good analogy would be earning the right to charge tolls on a toll road without performing any kind of improvements to the roadway. The patent troll would earn money from either charging huge fees to those who want to use the roadway or imposing severe penalties for those who use the road without knowing the terms of use. Patent trolls are more common in the United States because they are able to exploit structural issues within the patent and court systems.

In June 2013, then President Obama said of patent trolls while directing the U.S. Patent and Trademark Office to address the abusive practice: "They don't actually produce anything themselves, they're just trying to essentially leverage and hijack somebody else's idea and see if they can extort some money out of them."

Patent trolls are less of a problem in Europe because many European countries stipulate that losers in such court cases pay the legal expenses of both parties. This has the effect of eliminating some frivolous lawsuits. In April 2014, however, the U.S. Supreme Court ruled on Octane Fitness, LLC v. ICON Health & Fitness, Inc. to make it easier for the courts to impose legal costs on losers.

Patent Troll Practices

Patent trolling may involve one or more the following practices, though the full breadth of patent trolling would be hard to fully explain because of the many methods that are used:

  • Enforcing a patent without any intent of manufacturing a product or providing a service based on that patent, or without using it to conduct research, or otherwise utilizing it for the greater good;
  • Pursuing patent infringement claims that are baseless, may stifle manufacturing at a competitor, and may be easier and cheaper to settle than to litigate;
  • Buying a patent (usually from a bankrupt company at auction) with the intent of suing a competing company under the claim that it has a product that infringes upon the newly purchased patent;
  • Any utilization of a patent to solely enforce patent rights;
  • Patent trolling may involve venue shopping. For example, in 2015 some 45% of patent cases in the U.S. were filed in the Eastern District of Texas, home to a judge with both patent expertise and a track record of favoring plaintiffs. This practice has since been limited by the U.S. Supreme Court.

The protection of unutilized patents, such as by universities or non-profit research institutions, is not always patent trolling.

Patent Troll Origin

The term patent troll originates from an educational video, The Patents Video, released in the early 1990s. The goal of the video was to alert corporations and individuals to what some call the weaponization of patents, as well as to dissuade potential future trolls.

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