A patent troll acquires patents to sue or demand royalties from alleged infringers, without intending to manufacture or market the patented product. This practice is criticized for diverting resources from new product development and increasing licensing fees. Some companies proactively develop strategies to avoid trolls.
A patent troll is a term assigned to a person or entity who acquires a patent and then uses it in a way that is detrimental to the spirit and intent of the patent system. In general, a patent troll does not intend to sell or endorse the patented product. Rather, the troll purchases large quantities of patents and then sues or demands royalties from companies that allegedly infringe on the patents owned by the troll.
Peter Detkin, a former assistant general counsel at Intel, is credited with popularizing the term “patent troll” in 2001. He used the term to describe companies that had no intention of actually manufacturing or marketing a patented product but instead they were making money by suing alleged infringers of the product. The term is also now used to describe entities that purchase patented inventions for the purpose of collecting licensing fees from alleged infringers rather than for the purpose of actually manufacturing and selling the patented products.
The practices that patent trolls engage in are viewed in disparaging terms by many in the industry, including a number of software and technology companies. These critics argue that a patent troll inevitably forces a manufacturer to shift resources spent on new product development to defend a troll’s lawsuits. They also claim that the presence of trolls contributes to an increase in inferior patents and the payment of large licensing fees by manufacturers.
Patent trolls, which are usually private companies, often refer to themselves as patent investors. They believe they are particularly advantageous to an independent inventor, who would not have the capital or means to defend a patent on his own. A typical patent troll spends the majority of business costs on obtaining new patents and on legal fees.
In order to protect themselves from patent trolls, some companies have proactively developed strategies to reduce or eliminate contact with a troll. For example, some entities regularly check which patents are filed with a patent office. Other companies may decide to design their products based on products that have already been patented by a troll, which can have the effect of reducing potential licensing costs. Before developing a new product, companies can also conduct extensive searches of pending patent applications and currently patented products to ensure that the essential components of their new product are unique.
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