Free Enterprise - The FindLaw Small Business Law Blog

What to Do If Patent Trolls Threaten Your Business With a Lawsuit

Patents, and other forms of intellectual property, are meant to encourage creativity and innovation. That's why if you suspect that someone has infringed on your patent, you have the option of filing a lawsuit against that person. However, there are entities -- referred to as patent trolls -- that make money by suing or threatening to sue businesses for patent infringement.

The Target

These patent trolls used to target large companies because they do business in multiple states, which allowed patent trolls to sue them in any state they did business. Patent trolls were even able to find some federal court districts where their odds of winning were greater. However, this changed when the Supreme Court issued a ruling in May 2017 stating that companies could only be sued for patent infringement in the state where they are incorporated.

As a result of the Supreme Court decision, patent trolls have turned their attention to small businesses and startups. The patent trolls simply threaten to sue for patent infringement unless the business pays a sum of money for a "permanent license." Since the sum of money is usually relatively reasonable when compared with defending a lawsuit, the business is usually inclined to pay.

Defending Against Patent Trolls

While paying a fee may same like the easiest options, there are some steps you can take if your business has been threatened with a lawsuit for patent infringement.

  • Don't react impulsively. Although the threat of a lawsuit is worrisome, it's important to stop and think before doing anything.
  • Don't respond. Usually patent trolls send threatening letters to multiple companies at a time. So, it's possible that by not responding, they'll focus on businesses that did respond and forget about you. If you get multiple letters, however, it's a good idea to take additional steps.
  • Do some research. The Internet has provided a lot of information at our fingertips, so use it. Looking up the patent number and the entity threatening to sue your business can help you gauge if the patent troll will really file a lawsuit.
  • Talk to an attorney. While the primary reason businesses will pay in response to a letter threatening a lawsuit is to avoid legal costs, talking to an intellectual property lawyer can be very beneficial.

Running a small business takes a lot of time and energy and the last thing you want to do is deal with a patent troll. If you've received a letter threatening to sue you for patent infringement, you may want to consult with an experienced intellectual property attorney to get some guidance on what steps you can take to protect your business.

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