Fighting Back Against Patent Trolls
In recent years, patent trolls have been a hot topic in the intellectual property arena. Sometimes known by the less pejorative terms of patent assertion entities (PAEs) or non-practicing entities (NPEs), a patent troll is an entity that owns a portfolio of patents and generates revenue by collecting licensing fees, cash settlements or monetary damages through litigation or negotiations.
PAEs do not manufacture or sell any products and exist only to enforce intellectual property rights against those that do. PAEs are often viewed as anti-competitive because they drive up costs of doing business without providing any market value.
PAEs are particularly concerning when the patents that they enforce involve software or business methods. Until the mid- to late 1990s, the patentability of software was not completely settled and most software was protected in other ways, such as by copyright, so there is often a shortage of prior patents or technological history (aka “prior art”) documents easily accessible for review while examining the applications. As a result, the U.S. Patent and Trademark Office (PTO) sometimes grants overly broad patents of questionable validity.
When companies, especially smaller companies, receive a cease-and-desist letter from a large PAE, they often believe that their options are limited and they must pay the ransom or stop selling their product. This remains true even though the patent may be invalid or not infringed. Fortunately, recent developments made it easier than ever to fight back against this unfair practice.
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