A play-by-play on what a patent troll is, how they operate, and what you can do about them to protect your business...
Have you ever heard of "patent trolls?" If not, you probably have heard them referred to as their other, less-scary-sounding names such as patent holding companies (PHC), patent assertion entities (PAE) or non-practicing entities (NPE). But for the sake of drama, let's continue the usage of their pejorative name: patent trolls.
It sounds like some sort of freaky fairy-tale we're about to weave. But, unfortunately, these entities are real-life nuisances. According to law professor Dennis Crouch, a patent troll is a company or a person who "attempts to enforce patent rights against accused infringers far beyond the patent's actual value or contribution to the prior art."
They don't make anything. They don't supply anything. They simply buy up patent rights on existing or latent patents (which are usually vague or ambiguous), scour the world looking for people or companies who supposedly infringe on the patents they have acquired the rights to, and then (a) attempt to extract license fees and (b) sue for patent infringement upon their refusal to pay those fees.
So, what is their end game? Well, clearly: money. Simple as that. They're hoping you, the alleged "infringer," will be willing to pay some type of settlement ("ransom") to keep the suit from going forward. According to Harvard Business Review, patent litigation in the U.S. has cost defendants an estimated $29B per year in direct, out-of-pocket costs.