These three steps help small business owners defend their intellectual property from frivolous threats.
If you're a small business owner who has faced a frivolous patent dispute recently, you’re not alone. Thanks to patent assertion entities—or “patent trolls,” whose sole business is bringing patent infringement lawsuits to extract settlements—abusive patent litigation has skyrocketed since 2010.
June 2013, the White House released a study that found the number
of patent troll lawsuits tripled between 2010 and 2012, accounting
for 62 percent of all patent lawsuits in the United States. The Senate is now
considering a patent
which the House passed in December 2013.
Often, patent trolls begin with a threatening letter. Ignore it. Generally speaking, there is no harm in ignoring the first demand letter a small business gets from a patent troll, says Phoenix-based intellectual property attorney Donna Catalfio at Gallagher & Kennedy law firm. She has worked with small businesses and startups and has successfully defended clients against patent infringement claims. “In some cases, a patent troll is sending out hundreds of letters and trying to negotiate a settlement payment from multiple companies at the same time. By staying off the troll’s radar screen, you could get lucky and never hear from them again,” she says.
Catalfio also suggests reaching out to your industry association to see if other businesses have reported being targeted. If they have, you can potentially form joint defense groups, which are routine in patent troll cases, to share information and defense costs.
Catalfio cautions, the trouble begins to escalate when patent trolls follow up
with additional communication that set forth the small business owner’s alleged
infringement with specificity.
out for a letter naming the actual product accused of infringement and a
description of how that product mirrors the patent claims, Catalfio says. These
specifics often come in the form of a chart that maps the patent claims to the
elements of a company’s product or service.
when it’s time to seek legal advice.
Taking the issue to court—even if you’re not at fault—is not necessarily your next step. Litigation is expensive, and the settlement cost will typically be much lower than the defense cost.
your attorney may advise you to go on a different offense, which could be
filing a review before the Patent Trial and Appeal Board (PTAB), which was
established under the America Invents Act in 2012 to improve the process by
which a third party can challenge an issued patent.
Turner, an intellectual property attorney at Neal, Gerber & Eisenberg in
Chicago who has successfully helped small businesses with patent troll issues, says
this will generally stay litigation, is significantly cheaper than obtaining a
judgment through litigation, and doesn’t involve patent
infringement questions but limits the issue to patent validity. Turner explains
that this is especially beneficial because, under open patent litigation, the
question of infringement requires discovery of confidential information about
the defendant—for example, operations, product design, manufacturing techniques
and financial information.
And trolls won’t be keen for you to take this avenue. “The patent troll game is all about putting
pressure on the defendant to settle,” says Turner. “If PTAB review is
granted, the pressure shifts to the patent troll and hopes of a quick
settlement are off the table.”