Green, ugly creatures living under bridges that demand payment from anyone who passes: we have all heard the fairy tales about trolls. And I think we all imagine how terrible it would be to have to deal with such creatures. In the world of patent law, patent trolls are very real and just as difficult to defeat as those in fairy tales. A patent gives the inventor property rights over the invention for a certain period of time, essentially creating a limited monopoly. This monopoly allows the inventor to charge other parties for use of their invention, thus incentivizing the creation and sharing of new ideas.
While a clear cut definition of patent trolls does not exist, many would agree patent trolls can be described as any person or entity that does not produce the patented product or method, but charges a licensing fee to other entities that are possibly infringing on the patent or patents. A simplified example of how a patent troll is as follows: Company A (the troll) owns a patent for a widget bud does not produce said widget. When Company Be starts producing the widget (or even an arguably similar widget), Company A would demand that Company B pay a licensing fee for the widget (or face more expensive litigation). In this way, Company B is paying a “toll” to produce the product.
It is common for patent trolls to have a portfolio of patents in which they enforce. The portfolio is created when the patent troll buys patents with the sole purpose of increasing their portfolio to widen their scope of enforcement (and therefore more licensing fees). The patent trolls enforce the portfolio by sending a demand letter or providing a threat of a lawsuit against the infringers, forcing the accused to pay the fees.
Many of these patent trolls use low quality patents to collect money from companies or people that can’t afford to defend themselves in court. Many times, just the threat of the cost of litigation forces the entity to pay the troll. This extortion-like practice should be an easy fix, right? Laws could be enacted that prohibit any party from enforcing a patent if they do not produce the product. However, a solution to this problem is not that easy.
The reason fixing this problem is complicated is due to the uncertainty of what constitutes a patent troll. The definition given above is very broad, and would include institutions such as universities. Universities are awarded many patents, as such institutions are a large hub for innovation in our society. Yet universities fail to produce products from the patents. Broad sweeping legislation would eliminate universities from enforcing patents, which may limit funding for future research or have other unproductive results.
While no solution exists, Congress is currently working on passing a bill that will balance the need to eliminate unwelcomed patent trolls against the societal gains by some organizations that participate in this practice. Patent troll legislation is currently in Congress. The legislation does not broadly eliminate patent trolls, but instead tries to curb the organizations that abuse the patent system. Some of the way the bill attacks patent trolls is by increasing the requirements to file a patent lawsuit. Also, the legislation may limit the amount of discovery, reducing the cost of litigation. Lastly, it is proposed that the losing side must pay attorney fees for the side that wins. Some people believe these measures will disincentivize patent trolls from bringing frivolous lawsuits and encourage smaller entities to defend themselves in litigation.
While no overarching rule against patent trolls is plausible, the proposed solutions discussed will perhaps reduce such behavior. I believe one of the easiest ways to dampen the effect of patent trolls is to eliminate forum shopping. Because patent lawsuits can be filed almost anywhere in the United States, patent trolls can select friendly courts. A glaring example is the “rocket docket” in East Texas. It would be relatively easy to remove forum shopping, thus creating a roadblock for patent trolls to obtain their goal. While I understand the elimination of forum shopping is not the end-all in patent trolls, it would be a quick, effective step in the right direction. And while it may be a little longer until laws go into effect, one thing is clear – patent trolls must be evicted from under the bridge.