Free Enterprise - The FindLaw Small Business Law Blog

Startups Face Increasing Threat From Patent Trolls

You know that bully? The one who, rather than bring his own lunch to school, sits around, waiting to take other kids' lunch money? And he uses the unoriginal, yet effective, "pay up or else" threat? The patent troll is kind of like the bully of the intellectual property world. And while today's startups may not have the most lunch money on the playground, they are facing an increasing threat from these patent trolls.

Pay Up or Get Sued

Patent trolls -- or patent assertion entities -- operate by suing or threatening to sue people or businesses for patent infringement. They offer to settle for less than it would cost you to litigate the whole mess, to entice you to just give them your money. In exchange, they give you a "permanent license" to carry on with your business, and they drop the lawsuit.

Why Troll the Startup?

These patent trolls used to go after the deep pockets of big corporations because they could sue them anywhere that the corporation did business. However, in May 2017, the Supreme Court ruled that these companies could only be sued for patent infringement in their state of incorporation. With that wrench thrown in their operation, patent trolls are now focusing more of their shake-down efforts on startups and small businesses.

Tips to Protect Your Business

While it's tempting to just pay the requested sum and move on with your life, that might not be the best solution for your business. For one thing, other bullies on the patent infringement playground might get word that you're willing to pay up without a fight. Other options you can try when a patent troll targets your business include:

  • Ignoring them. Some of these patent assertion entities send out letters to see who will respond. By ignoring them, you send the message that you're not even willing to engage in their shake-down efforts. However, if they keep at it, you should respond.
  • Looking up the patent. Googling the patent number can tell you if it's been the subject of previous lawsuits. This can help you gauge the willingness of the patent troll to actually file a lawsuit against you.
  • Consulting an attorney. Some attorneys will provide a free or low-cost initial consult. Don't underestimate the effectiveness of fighting back. Sometimes all it takes is a little research and a strongly worded letter.
  • Join a network. You can join a patent-fighting network -- in some cases for free. The way it works is all members to the network immunize each other against patent troll litigation for their respective patents.

Nobody likes a bully. And you shouldn't have to deal with one alone while you're trying to run a legitimate business. Consult with an experienced business attorney to gain peace of mind.

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