Friday, February 13, 2015

What is a "Patent Troll"?

A patent troll, also known as a non-practicing entity (NPE), is a person or company that enforces patent rights against accused infringers solely to collect licensing fees. The litigation plaintiff typically does not manufacture products or supply services based upon the patents in question, but rather engages in economic rent-seeking. Not considered patent trolls are NPEs such as individual inventors, university research laboratories, development firms that offer their patented technologies to licensees in advance, and licensing agents that offer enforcement and negotiation services on behalf of patent owners. Definitions include a party that does one or more of the following:

  • Purchases a patent, often from a bankrupt firm, and then sues another company by claiming that one of its products infringes on the purchased patent;
  • Enforces patents against purported infringers without itself intending to manufacture the patented product or supply the patented service;
  • Enforces patents but has no manufacturing or research base;
  • Focuses its efforts solely on enforcing patent rights;or
  • Asserts patent infringement claims against non-copiers or against a large industry that is composed of non-copiers

In 2013 Patent Trolls filed more than 3,000 infringement lawsuits nationwide (more than times higher than the number in 2006).On June 4, 2013, the National Economic Council and Council of Economic Advisers issued a report finding significant harm to the economy from such entities and made recommendations to address them. Meanwhile, the   U.S. Supreme Cour in such cases as Octane Fitness, LLC v. ICON Health & Fitness, Inc.  decided on April 29, 2014, has indiated a greater willingness to allow a recovery of attorneys fees' by a successful defendant. The Supreme Court essentially made it easier for courts to make the loser pay for all attorney costs, if the lawsuit is found to be frivolous.