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Patent trolls target small business

On Behalf of | Jul 20, 2019 | Patent Law

Patent trolls are patent assertion entities who buy up patents from bankrupt businesses, auctions and inventors for pennies on the dollar. They traditionally would then use these purchases to go after large corporations and sue for infringement. They do not engage in any business other than suing operating companies.

Change in law effects targeting

In the good old days of patent trolling, the patent assertion entities utilized a rule where companies could be sued in any state where they do business, and large companies tend to do business nationally. They then turned to federal districts that were more apt for favorable ruling — the Eastern District of Texas, for example, handled a vast number of tech disputes despite being thousands of miles from Silicon Valley because its judges often ruled in favor of plaintiffs.

The law changed in 2017 when the Supreme Court unanimously ruled that companies could only be sued for infringement in the state where the defendant is incorporated. This made it much harder for patent trolls to win their cases.

This switch led to the idea to shake down small businesses with smaller suits where it is more cost effective and less disruptive for the company to make a one-time payment instead of wasting valuable time fighting the claim.

Alternatives to paying

Many businesses do not want to engage in litigation, but it is best to speak with an IP attorney who has experience handling these types of cases. These legal professionals can determine whether the case has any merit, sometimes in quick fashion during an initial consultation.

Being threatened with a lawsuit can be a scary thought for a small business owner, particularly if it is based on some obscure patent, but the key is not to panic. Even if the claim does have merit, an attorney may still be able to negotiate the initial request down to a much lower amount.

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