A Patent Troll is an entity that owns patent rights and sues or threatens to sue to enforce for infringement or licensing royalties, yet often does not manufacture any products or supply any services based upon the patent rights that they hold. They simply make a business out of suing people or companies. Other terms that might be used for a Patent Troll include a Patent Holding Company (PHC), Patent Assertion Entity (PAE), and/or a Non-Practicing Entity (NPE).
Patent Trolls use the expense of defending patent infringement claims to, in essence, blackmail legitimate companies (that provide actual products or services to the public) into a quick settlement. The defense of patent infringement cases is by nature expensive and time consuming; thus, Patent Trolls leverage this to force otherwise non-infringing companies into paying their ransom for a license agreement or settlement.
Two Principle Defenses When Facing a Patent Troll
Patent law is one of the most specialized branches of law. A patent infringement case has many unique characteristics that are not found in normal business litigation or breach of contract cases. That said, there are a number of principles of patent infringement litigation that are helpful to know. Two of the principle defenses to utilize in patent infringement litigation are (1) the defense of non-infringement and (2) the defense of an invalid patent.
There are two types of alleged infringement:
- Direct infringement - the accused infringer practices each element of the patent holder's patent claim;
- Indirect infringement - the accused infringer does not practice each element of the patent holder's patent claim, but either (a) contributes to direct infringement by another party or (b) induces another party to engage in direct infringement.
A party can only be liable for indirect infringement if another party is a direct infringer.
The Non-Infringement Defense
The defense of non-infringement is one of the most often utilized defenses. Simply as the name states, the defense is that the alleged infringer does not include or perform one or more of the required claim limitations set forth within the patent and as result, does not infringe on the asserted patent claim. In basic terms, the accused product or process is not the same as the patented invention.
The Prior Art Invalidity Defense
The next most common defense is to establish that the patent claim is invalid. One of the most common ways of addressing this is through prior art invalidity. Prior art invalidity focuses on establishing that someone else came up with the exact claimed invention prior to that claimed by the patent holder. Hence, prior art. Also, prior art can be established by an obviousness defense. An obviousness defense asserts that the claim is obvious to a person of skill in the art at the time of the filing of the patent.
While there are many additional defenses to patent infringement, these tend to be the most commonly asserted.
SCOTUS Deals Blow to Patent Trolls
The Supreme Court of the United States recently dealt a heavy blow to Patent Trolls. In the Alice Corporation v. CLS Bank International case, SCOTUS addressed patentable subject matter. The Court held patents invalid because the claims were drawn to an abstract idea, and implementing those claims on a computer was not enough to transform that idea into patentable subject matter. This has helped strengthen the defense against Patent Trolls.
SCOTUS also aided in defending against Patent Trolls by its ruling in the Octane Fitness, LLC v. ICON Health & Fitness, Inc. case. The Octane Fitness decision issued on April 29, 2014, and it dealt with fee shifting in patent lawsuits. SCOTUS made it easier for lower courts to make the losing party pay for all attorneys' fees and costs. In frivolous or baseless claims, in other words, the judge could order the Patent Troll to pay for it.
On a final note, it's worthwhile to mention that the U.S. Congress and Texas Legislature have taken this judicial cue and have begun to implement legislation to curb the filing of frivolous Patent Troll suits.
What to Do If You Face a Patent Troll
If you face a Patent Troll, retain counsel who is well versed not only in defending against Patent Trolls, but also in going on the offensive. Patent Trolls do not want to incur any more time or expense on a case than is necessary, so having an attorney skilled in the unique laws of patent infringement litigation is essential to your success.
At Hendershot, Cannon, Martin & Hisey, P.C., we have successfully defended multiple clients against Patent Trolls and are proud of our success rate. If you receive a demand or a lawsuit from a Patent Troll, take action now by calling 713-893-1668.
About Hendershot, Cannon, Martin & Hisey, P.C.
Based in Houston, Hendershot, Cannon, Martin & Hisey, P.C., provides defense in patent litigation nationwide. Founder Simon (Trey) Hendershot, III leads the division of the firm responsible for defending against Patent Trolls.