Relates to a service of the Rickert Expert Group: Patent Litigation Expert Services, a division of Wiederholt & Rickert Partners, LLC.
Patent trolls, a common term for non-practicing entities (NPEs), are shell companies that do not design, manufacture or distribute products. Rather, their sole purpose is to acquire and license patents to businesses. The Patent Troll business may be morally wrong (it is!), but it is legal, and it is a growing industry, with annual growth of nearly 100%. Last year alone, NPEs extorted over $30 billion from technology companies.
NPEs start up by targeting smaller companies with nuisance suits, offering manageable settlements amounting to 10s of thousands of dollars. Startup companies almost always settle. Eventually, the Patent Trolls build up a war chest, allowing them to try their hands with bigger fish, offering sizable settlement terms that are still quite a bit lower than the cost of defense. What happens? More often than not, the big companies settle as well. These settlements are “get lost” money (the polite term).
NPEs tend to like the path of least resistance, so companies that earn a reputation as easy targets will be sued repeatedly. Companies that fight back hard earn a reputation for being dangerous targets. The first time an NPE runs up against a company willing to spend as much as necessary for a strong defense, it is a rude awakening. I have been a Testifying Expert Witness for a Defendant with a “NO SETTLEMENT” policy, and learned quite a lot about patent troll tactics, and, more importantly, about their weaknesses, and there are many!
I will not reveal too much information about how to wage a war (that you win) against a patent troll (NPEs and their ethically-challenged experts might read this), but I will provide a few nuggets:
- Make them spend a lot of money (they REALLY hate that!)
- Exploit the fact that the patent troll is usually not well-versed in his own Patent Prosecution History
- “Take out” the troll’s expert witnesses (Trolls usually hire Expert Witnesses with impressive “win” records, but lack expertise specific to the case)…remember, this is a war!
- Hire a Testifying Expert Witness who can stand up to the inevitable counter-attack in response to disqualification of one or more of the troll’s Expert Witnesses.
There is a lot more. If you are up against an NPE, let’s talk.