Patent trolls are the unpleasantly named business entities that buy up patents from bankrupt companies, auctions and desperate inventors for pennies on the dollar. In the past, the patent trolls would then go after big businesses with deep pockets, suing for infringement and winning a settlement. They do this rather than operate a company that uses the patent.
New laws affect targeting
In the past, the plaintiffs would cherry-pick circuit court districts based on past rulings. The Eastern District of Texas, for example, saw a lot of technology cases because the court was far removed from the influence of Silicon Valley and typically ruled in favor of the trolls/plaintiffs.
The Supreme Court unanimously ruled in 2017 that the patent trolls/plaintiffs could only sue companies in the state where the defendant is incorporated instead of wherever they happened to do business. This essentially awarded the defendants’ home-field advantage, prompting the trolls to look for defendants who didn’t have as much money or political capital. The new targets were small companies and start-ups.
They choose these because the defendants:
- Had less money to defend themselves
- Were more vulnerable to lawsuits
- Were more interested in settling to clear the path for their new business
Don’t be so quick to pay
Honest business owners often want to get on with their work. Still, it is a mistake to pay plaintiffs without first working with an experienced intellectual property attorney. These legal professionals can weigh the merits of the case and then propose a solution, which may include not paying or paying a more reasonable settlement.