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A patent troll is an individual or business entity that willfully files — or purchases — patents for the sole purpose of keeping others from using them.

The more polite terms are non-practicing entity (NPE), which is a company that exists to hoard patents, and patent monetization entity (PME), which is usually a lawfirm that seeks to protect patents for NPEs.

Either way, these people are trolls and they’re clogging up legitimate legal channels for patent protection among individuals and businesses that need it. These trolls have such a hold on the legal system that it ends up lengthening the patent-obtainment process — and by proxy, makes the entire process more expensive for everyone.

Patent trolling is specific. For example, when Apple patented a bendy iPhone Apple Patents Bendy iPhone, Android TV Replaces Google TV [Tech News Digest] Apple Patents Bendy iPhone, Android TV Replaces Google TV [Tech News Digest] Apple patents a bendy iPhone, Android TV replaces Google TV, the FBI maintains North Korea hacked Sony, David Cross looks to BitTorrent, Bill Gates drinks human waste, and a basketball referee makes the wrong call. Read More , they intended to use that patent in the future, but even if they end up not using it, they still filed the patent with the intention to innovate, not to sit on it. On the other hand, patent trolls obtain patents to sue, not to use.

And this is a big problem for all of us.

The Birth of a New Industry

In the United States alone, over half of all patent-related cases are filed by trolls with the sole intention of gaining monetary judgments for patents that they intend to never use. In fact, many companies build up — or purchase the rights to — many patents just to hold them in the hopes that someone infringes on them (or approaches them for lucrative licensing deals).

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According to a study published by UC Hastings, 56-percent of all patent-related lawsuits were filed by patent monetization entities. At the same time, these non-practicing entities have made three times as much as legitimate companies — all while never producing products and never offering services. Instead, these companies fleeced legitimate individuals and businesses out of $8.5 million per judgment on average.

Patent trolling is now a business.

The thing is, patent trolls don’t even have to get their cases heard in court to make huge profits. The business model actually seeks monetary settlements out of court, hoping that most companies will forego the option of length and expensive legal battles.

Knowing this, patent trolls often seek smaller amounts of money (between $10,000 and $1,000,000) in order to avoid these court cases. After careful analyses of risks and rewards, as well as the costs of fighting such cases, many legitimate companies pay asking price — even when they know these suits are frivolous — rather than risk years in court and millions in legal fees.

Never has there been a better time than now to learn how to perform a patent search FreePatentsOnline : Patent Search Engine FreePatentsOnline : Patent Search Engine Read More .

3 Famous Examples of Patent Trolling

I could easily fill a book with frivolous patent lawsuits. But since we’re working within the confines of a word count, here are just a few examples of cases that garnered media attention over the past few years.

IPCom v. Apple

IPCom operates as a patent monetization entity, which is an NPE that seeks to aggressively defend patents. These entities often have portfolios of hundreds, and even thousands, of patents owned by the entity itself or by represented clients.

apple-logo-colorful

The case came about in 2014. IPCom brought forth a suit against Apple claiming willful infringement on multiple patents. The patent technology itself pertained to a term you’ve heard thrown around a lot in recent years: “fast lanes.” These fast lanes gave certain operators priority access to networks, even when these networks were already overcrowded. IPCom argued that Apple was using this technology in willful defiance of German patent law.

What made this case notable was that IPCom owned the patent to this technology, but this patent was a standards essential patent (SEP). Such patents require owners to license the technology to competitors under terms that are deemed fair, reasonable, and non-discriminatory. Apple argued that this wasn’t the case with IPCom.

Ultimately, the courts sided with Apple and the case was dismissed.

Rotatable Technologies v. Rackspace

Rotatable Technologies owned a patent relating to screen orientation in computing devices. Essentially, the patent covered the auto-rotation of your screen when you turn the device Force Your iPhone To Use Landscape & More With iOS Accessibility Options Force Your iPhone To Use Landscape & More With iOS Accessibility Options Apple products are notoriously closed-off to tinkering - you can either jailbreak your device, or you can use it as intended: carefully polished, one app at a time. To accomodate people with special needs; decreased... Read More .

ipad-and-notebook

Rackspace argued that they didn’t willfully infringe on the patent because the technology they used to create their cloud mobile applications How Does Cloud Computing Work? [Technology Explained] How Does Cloud Computing Work? [Technology Explained] Read More wasn’t actually their own. They argued that, through use of Apple’s libraries and Android’s open source software, this functionality wasn’t theirs. Rather, it was a standard process on the devices for which they programmed their applications.

Sensing that Rackspace wasn’t going to back down, Rotatable Technologies offered to settle the case for $75,000. Rackspace refused. The case ended with a judgment in Rackspace’s favor, as well as a judge invalidating the original patent belonging to Rotatable Technologies.

Sadly, not all cases end in favor of the good guys. In fact, most don’t. For example…

Smartflash v. Apple

Smartflash is an NPE that held three patents to digital rights management and other inventions related to data storage From Punch Cards to Holograms - A Short History of Data Storage From Punch Cards to Holograms - A Short History of Data Storage Let's take a look at some of the technologies that shaped modern data storage, as well as where we go from here. Read More and payment systems on mobile devices 8 Things You Probably Didn't Know About Digital Wallets 8 Things You Probably Didn't Know About Digital Wallets Digital wallets are billed in most tech circles as the future of real-world payment technologies. Read More . They argued that Apple infringed on these patents by using their technology in both the iTunes Store and the App Store.

smartflash-header

Smartflash sought a judgment for $852 million in damages while Apple argued that the judgment should be for no more than $4.5 million.

The judge sided with Smartflash and awarded a judgment of $533 million against Apple in favor of a company that never intended to use or improve upon its patent.

Bottom Line: Patent Trolls Are Wicked

In a semi-famous op-ed in the Wall Street Journal, journalists Stephen Haber and Ross Levine penned a piece titled, “The Myth of the Wicked Patent Troll”. It’s an op-ed so they can say whatever they like, but there is no myth: patent trolls are indeed wicked.

In fact, both The White House and Congress have completed studies in recent years showing that patent trolling does indeed stifle innovation. Because ligitation against patent trolls is often length and expensive, the entire process is a major roadblock towards future technological breakthroughs.

For smaller businesses, patent-related court cases could bankrupt them even if they win. Add to that the appeals process, the mountain of legal fees, the paperwork, and the stall procedures that keep them from going to market, and you’ll see why many companies are more than willing to settle with these patent trolls.

It’s legal extortion and the extortionists are profiting billions while legitimate technological advances grind to a halt under the watchful eye of our judicial system. And until we can find a better way to approach patent law The Electronic Frontier Foundation - What It Is & Why It Is Important The Electronic Frontier Foundation - What It Is & Why It Is Important Electronic Frontier Foundation is an international non-profit group based in the US, committed to fighting for digital rights. Let's take a look at some of their campaigns and how they can help you. Read More , these trolls will be here to stay.

What do you think fixes the patent troll crisis we currently find ourselves in? Sound off in the comments below.

Image Credits: Stack of office folders by billdayone via Shutterstock, Apple iPad 3 Event by Blake Patterson, iPad by Sean MacEntree both via Flickr

  1. Bob Bobberson
    November 20, 2015 at 7:02 pm

    I skimmed the article and skipped to the comments. Glad I did, because when the article responds to valid criticism with "Cool story bro," I know I shouldn't waste my time here further.

    Cool story bro.

  2. A41202813GMAIL ..
    November 10, 2015 at 11:26 am

    Change The Law, To Make Copyrights And Patents To Become Public Domain 5 Years After The First Sale - No Exceptions, Whatsoever.

    Problem Solved.

    Cheers.

  3. Jeff Schallenberg
    November 4, 2015 at 7:01 pm

    Here's another example from the world of computer applications:

    The Patent Scam, by X-Plane developer Austin Meyer

    https://youtu.be/1xggxHI0w5I

  4. Jim Harlan
    November 3, 2015 at 8:52 pm

    There are so many problems with this article, I'm not even sure where to start.

    From the first paragraph, "patent troll is an individual or business entity that willfully files — or purchases — patents for the sole purpose of keeping others from using them." This sounds to me like you have no idea what a patent is... namely, the right to exclude others from making, using, selling, etc., the invention defined by the claims. So the basic purpose of a patent is to "keep[] others from using them." Additionally, if "an individual or business entity...willfully files...patents," then it is not a troll but an inventor! If your opening paragraph lacks such credibility, I am fearful as to what the rest of your article says.

    Continuing with the second paragraph and your definition of an NPE that you claim "exists to hoard patents" couldn't be farther from the truth. To begin, an NPE is a Non-Practicing Entity that includes universities and research institutions, neither of which exist to hoard patents. And a Patent Monetization Entity that is usually a law firm... is a joke. Most law firms are too caught-up with actual litigation and courtroom proceedings, and have no ability to "sell" the product much less create a marketing deck that won't bore its audience. Law firms are enforcement tools employed by PMEs.

    In the third paragraph, "These trolls have such a hold on the legal system that it ends up lengthening the patent-obtainment process — and by proxy, makes the entire process more expensive for everyone." This doesn't even make sense. A troll cannot enforce a pending patent application but only an issued patent. Thus "trolling" has no effect on the "patent-obtainment process."

    Very disappointing article.

    • Bryan Clark
      November 4, 2015 at 12:04 am

      Cool story, bro... but you're telling it wrong.

      A patent that someone purchases, files, etc. in order to use or develop into a product of their own, license to someone else, etc. is legitimate use of a patent. Someone that gets a patent to sit on with no intention of using, or allowing others to use through licensing, etc. is a patent troll. The difference isn't a difficult one to see.

      An NPE does exist to hoard patents (although usually for others, but that's not saying some business don't have entire segments devoted to patents and patent law). The University you mention isn't an NPE, it contracts that work to out one... typically a law firm that handles patent disputes, and filings.

      The third point you missed entirely. It keeps those with pending patents from using them due to disputes in court.

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