The word troll conjures up childhood images of grotesque creatures hiding under bridges waiting to pounce on unsuspecting travelers. Well, patent trolls aren’t too different – they prey on unsuspecting businesses.
Patent trolls are people, typically lawyers, who indiscriminately buy a lot of patents with no intention of using any of them to develop a product or bring a product to market. They’re looking for potential targets to sue for intellectual property infringement or patent infringement. However, sue may not be the proper terminology when it comes to patent trolls. Their real strategy is to identify a victim and extort them by threatening a lawsuit against the end users or retail outlets that sell that business’s product. There is no intention to see the lawsuit through to judgment. Essentially, a patent troll’s primary goal is to extort the business into a settlement slightly less than the cost of litigation and loss of sales.
Since we work with so many start-ups, this type of extortion concerns us deeply. President Obama publicly addressed his concerns with patent trolling and backed a bill called the Innovation Act. If this bill ever passes, it will make it easier for businesses to fight back against patent trolls and allow defendants to recover court costs if the court finds the plaintiffs case is without merit. I will keep you posted on whether or not it passes.
Another important note: defense and settlement costs are not covered by a General Liability or Product Liability policy. A business will need to purchase an Intellectual Property Defense policy for patent infringement coverage.
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