Patent Troll

It is difficult to define a patent troll accurately. The line between proper and legitimate exploitation of patents and abuse of owner's rights is a very fine one. A patent gives the owner the right to exclude others from producing and selling a protected product or process. Patent law also allows the patent owner to ask for a compensation as high as possible if the is willing to waive these rights. Why are some patent owners who just ask for as much money they can get are called trolls?

The simple answer is, because the term "patent extortionist" was considered libel. So a less insulting name was introduced. Intel used this expression for companies who are suing for patent infringement and who were trying to "make a lot of money off a patent that they are not practicing and have no intention of practicing and in most cases never practiced. However, in most jurisdictions patent rights do not depend on the intention of the patent owner to use a patent, or if he does not use it to grant a license to third parties. Very seldom in patent law, measures are provided, like compulsory licenses in the Monegasque Patent Law for any patents that are not executed for a certain time. With a definition like above, even well-known companies, who are known for their aggressive licensing program, might fall in this definition.

At least there is the hope for a company that was "convinced" to pay a license by a competitor, that one day, if they have a better patent portfolio there will be payback time. I can tell from my own experience that this is highly motivating to go through a company’s patent portfolio and find out that payback time has come. Some companies even stopped their own production, because they learned, they can make more money with their patent portfolio than with their own slowly going sales of not well branded products. I do not know if the intention was also to get rid of the exposure, but in fact it made them invulnerable for any counter claim for patent infringement.

Innovative people have always patented ideas, which they envisaged to be a logical development of a certain technology. They laid out their patent pit falls in the hope sooner or later a big company will fall into one of these pit falls. In German thy have been called “Wegelagerer” (highwaymen) and exist almost as long as patent laws exist.

Now, what makes patent trolls more dangerous than a “highwaymen”. The simple answer is, like in most cases: “money”. Patent trolls raise money for the purpose to acquire as many patents as possible, from bankrupt companies as well as companies willing to sell their portfolios. The pure magnitude of their portfolio seems to be suffocative.

On the other hand it is not surprising, that patent trolls seem to be mainly an U.S. American phenomena. Allegedly poor examined patents, which are uphold in patent infringement suits, juries deciding if there is an infringement or not, high legal costs, that sometime force smaller firms to settle law suits, as they would be bankrupt, even before the law suits ends and high awards (punitive damages) favor those who have more money.