Summary: Dorsey partner Craig Hemenway discusses in Intellectual Property Today the risks posed by so-called "patent trolls" to companies generating intellectual property. Patent trolls are individuals or groups acquiring patents, often from bankrupt firms, for the sole purpose of generating revenue by suing to enforce the patent. Since the cost of defending a patent infringement suit typically exceeds $1 million, many defendants elect to pay for licenses to these dubious intellectual property claims.
Hemenway describes proposed U.S. Congressional legislation aimed at minimizing the impact patent trolls can have on legitimate business. He cautions, however, that passage of the bill remains uncertain, with no date for enactment scheduled. Accordingly, he advises companies to institute the following procedures to reduce their exposure to trolls:
- Have your patent counsel or a technologist familiarize themselves with the major trolls and commonly litigated patents in your company's industry.
- Consider having a patent attorney provide a clearance decision before entering into a new business line or launching a new product.
- Stay in contact with your peers at similar companies. It can be more cost-effective for a group of companies to collectively bring a declaratory judgment action against the troll and split the legal costs.
"Patent Trolls Prey on Business Innovation" was published by Intellectual Property Today, May 2008. Republished with permission.