Patent trolls, also known as non-practicing entities (NPEs), are companies or individuals that buy up patents solely to profit from royalty payments or litigation settlements through patent infringement lawsuits. With no intention of actually using the patents, their business model relies on aggressively asserting patent rights against operating companies. Defending against patent trolls can be extremely costly, even if the allegations are baseless. Fortunately, with some strategic planning, you can reduce your risk of becoming a target and be better prepared to defend your business if you are attacked.
Do Your Due Diligence Before Licensing or Acquiring Patents
Before licensing or acquiring patent rights from another party, do your homework to ensure the patents are valid and that you are obtaining all ownership rights. Check that the previous rights holders actually had the authority to grant licenses or transfers. Examine whether any licensing terms could ensnare you, and confirm that the patents are not subject to any non-assertion covenants or encumbrances that could limit your rights. Retain an experienced patent attorney to review the chain of title and perform comprehensive due diligence. Getting the paperwork right upfront prevents future headaches.
Actively Monitor Your Patent Portfolio
Keep a close eye on your patent assets to ensure nothing slips through the cracks that could make you vulnerable. When maintaining patents, be timely with paperwork and fee payments. Consider pruning older, unnecessary patents that you are not using to avoid associated costs. Routinely audit your patent portfolio and discard or donate patents that no longer provide value. If selling patents, be cautious of clauses that could later constrain your business. Staying tightly integrated with patent processes reduces the chances of an unwanted troll lawsuit.
Be Proactive With Patent Applications
When drafting and filing patent applications, strive to be as clear and complete as possible. The goal should be leaving little ambiguity that could potentially be exploited later. Define terminology precisely, include thorough descriptions and drawings, cover multiple embodiments, and incorporate both method and apparatus claims if applicable. Retain all documentation related to invention conception and reduction to practice to reinforce validity. Given the threat of trolls, a well-constructed and defensible patent application today is worth the extra investment.
Develop Strong Records of Use
Carefully build and maintain records that demonstrate your patents are being actively used in the development or production of products or services. Concrete evidence of implementation strengthens your case against non-use assertions. Retain dated lab notebooks, product/service financials, commercialization plans, marketing materials, and other relevant records. Consider including external references documenting use, such as customer reviews or mentions by industry analysts. If you choose to assert your own patent rights later, you'll be equipped with proof points.
Join a Patent Defense Coalition
Explore membership in a patent defense coalition, which provides legal resources and collaborates on strategies for challenging NPEs. Two major coalitions, the License on Transfer (LOT) Network and the Allied Security Trust (AST), maintain databases of member patents and allow rights to each other's patents solely for defensive purposes. This deters attacks and constructs a stronger pooled defense. The Open Innovation Network (OIN) cross-licenses Linux-related patents to protect open source software from trolls. Joining forces helps discourage frivolous lawsuits.
Respond Cautiously to Licensing Demands
If contacted by a possible troll regarding patent licensing, proceed with extreme caution. Do not admit infringement, share any more information than absolutely necessary, or make any verbal commitments. Request that all communications be in writing and seek qualified legal advice before responding. In many cases, it is wisest to politely decline opening negotiations. Engaging with trolls too quickly can weaken your position later on if things escalate. Keep the door firmly closed to prevent fishing for vulnerabilities.
In summary, patent trolls rely on identifying easy legal targets and leveraging vagueness or uncertainty in patent language. By actively managing your patent processes, thoughtfully drafting applications, documenting usage, aligning with defensive coalitions, and avoiding engagement with aggressive NPEs, you can greatly reduce exposure and take control of the narrative. With foresight and discipline, you can maintain focus where it matters - on conducting business and bringing innovations to market.
Disclaimer - The contents of this article do not construe legal advice, they are our personal views.