Right of way: fighting the patent trolls under the bridge of innovation.

AuthorSorensen, Dan

For centuries, trolls were only known as mythical creatures found in the mountains across Scandinavian countries. These powerful, ugly creatures were notorious for terrorizing humans, and they haunted the dreams of young children who believed they were real.

Today, trolls actually exist--not as dimwitted humanoids living in caves, but as corporate entities that attack legitimate businesses for infringing on patents of questionable validity. These trolls, or--as they are formally known--patent assertion entities, cost businesses of all shapes and sizes massive amounts of money. In fact, a Boston University study found that patent trolls cost businesses nearly $30 billion in 2011.

Perhaps the only thing harder than fighting a troll is navigating the patent process. That said, there are steps companies can take to safeguard against trolls, take a stance, and protect their business, their customers and their intellectual property

Troll Methodology

There is no one particular way to deal with patent trolls; however, understanding their method of operation is the first step in preventing being targeted.

Most patent trolls prefer to never go to trial. Because it can cost upwards of $1 million to defend against a patent troll, a settlement of $250,000 can appear reasonable to many businesses. Even if you were to successfully defend against a troll, you could still be out more than $1 million--four times the cost to settle. This is why patent trolls often push for settlements over an actual lawsuit. They then take the funds and move on to the next target.

Many patent trolls take one specific patent and threaten large numbers of companies with litigation. In these cases, even small businesses that are not directly infringing a patent can be at risk.

Innovatio IP Ventures is a patent assertion entity that made news in recent years for suing coffee shops and hotels for licensing fees for using off-the-shelf Wi-Fi routers. Rather than go after the companies that built the routers, like Netgear or Cisco, Innovatio targeted end-users, requesting settlements of approximately $1,000 per employee.

These patent assertion entities target thousands of small businesses, looking for payouts as little as a few thousand dollars. After several thousand of these payments, the trolls have amassed millions of dollars, which they use to purchase new patents that can be used to threaten other companies.

Collateral Damage

It is easy to see how patent trolls are impacting companies, including many Utah businesses. For startups and...

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