Americans have a reputation for being sue-happy. After all, we're the country that's had parents suing Oreo for putting trans-fat in their cookies and a man suing Anheuser-Busch when no beautiful women appeared after he got drunk. But cases like those don't have much to do with inventors..until they're at the wrong end of a lawsuit.
If you've never heard of patent trolling, it's a term given to people or companies who file patents for products they have no intention on ever making, then sue any company that produces a similar product. Most often, the company being sued ends up settling out of court and the patent troll ends up with money for nothing. It takes about $900 to write and file your own patent (more if you intend on hiring an attorney to do it for you), so patent trolls file hundreds of patents covering huge swathes of intellectual property. And the second an innocent engineer wanders into that territory, the patent troll launches into action.
Last year, RPX reported that lawsuits by NPEs (non-practicing entities, aka trolls) were on a decline from 2013 to 2014, and that report was heartening. But according to the report, "62% of unique defendants in 2014 had less than $100M in annual revenue, and the frequency of NPE litigation against smaller companies has remained remarkably steady over the past five years." Which means startups are especially vulnerable to trolls looking to make a quick buck from someone else's ideas.
An original 1908 patent for a breathing computer.
This month in particular saw a tremendous spike in the number of lawsuits filed by trolls: over 200 cases were filed on November 30th, and 790 were filed during the month of November. Hilariously, most came from strange LLCs (with no actual physical location) in Eastern Texas.
The government is aware of the problem, but there's a fine line between too much regulation and not enough. In 2013, Obama called for a crackdown on patent trolls, but some major pharmaceuticals objected to his proposed measure because they worried they'd lose the ability to protect their own patents. In April of this year, a bill was introduced to the Senate that required demand letters (the initial threats from an NPE that tell legitimate companies to either lawyer up or settle out of court) be restrained by new criteria, additional details be provided by fake companies claiming to own a patent, and hefty legal fees paid by the losing party filing the frivolous lawsuit. As of yesterday, patent trolls are going to have a tougher time getting money out of innocent parties: trolls can no longer file a claim without detailing what aspect of their patents have actually been violated.
It's still a scary landscape for the innovator. Every major company has been targeted by NPEs (though when Newegg was targeted by a particularly malicious troll, it refused to back down) and they've hurt dozens of smaller businesses as well. It's discouraging to think how many legitimately great products were stopped from coming to market because frivolous litigation blocked the path.
But the new law against patent trolls is a good sign, and if your company is targeted, the best thing to do is fight. Every time a company gives in to the demand of a patent troll, they become slightly more powerful. Plus, innovators should be the most creative when it comes to fighting back-- take the fight to social media, investigate the shell company behind the lawsuit, and exhaust your enemy. What's the one thing a troll can't stand? A larger, more obnoxious troll.