Happy Halloween! We don’t want to scare anyone, but in case you didn’t know: there are trolls lurking out there. Here’s how to recognize them, and to protect yourself.

Here’s a common scenario:

You’re an entrepreneur, you have a great idea, you get excited about it - and then you realize it’s already been done.

That’s life. It happens all the time. On to the next idea!

Your next idea is a winner. You develop it, produce it, and patent it. You feel sure that your idea is safe from copycats and that you’re the rightful owner of your own intellectual property...

  ...and along comes a troll!

As in every  fast-paced industry, innovation in tech sector relies not only on new concepts, but the ability to build upon existing models. There is a difference between patent theft and progress.

 But this isn’t a law blog. It’s a tech blog. And in the tech sector, the threat of PAEs (Patent Assertion Entities) - or more accurately, patent trolls - is an increasingly more worrisome challenge than getting a patent approved.

 Because only when a patent is owned do the trolls come out.

In a joint effort to protect our tech and intellectual property from patent trolling Empower has recently joined the LOT Network. 

Founded by Ken Seddon, an expert IP issues who had previously worked with Apple, Intel, and several other leading technology development companies, LOT (License of Transfer) Network counts executives from Google, Canon, and Red Hat on its board of directors.

LOT Network’s mission, in a nutshell, is to foster the allyship of developers by creating a non-profit community where the cross-licensing of patents helps protect the greater good of network members from patent trolls.

Sure, it’s complex. And we’re not legal professionals. Much in the same way Empower handles our member’s marketing missions while they run their business, LOT Network helps us ensure our proprietary tech is safe from trolling while we manage our client’s needs. 

But because the spooky season is upon us, I thought I’d share with you a tale of terror, that you may heed this warning…beware the Patent Troll!

What is a Patent Troll?

The polite to refer to them are as “Patent Assertion Entities.” Sometimes, they’re referred to as PAEs. 

But we can just call them patent trolls. 

And a patent troll is a person or business that buys patents from one company, then files lawsuits against other businesses to blame them for patent infringement. They then turn a profit off that lawsuit, rarely - if ever - producing their own goods or services.

In other words, a patent troll is a vampire, out for the blood of hardworking entrepreneurs. 

Although they're often called patent trolls, they’re also known, fittingly, as patent sharks or patent dealers. In a feat of Orwellian word bending, you’ll occasionally see them labelled as “patent marketers.”

(Empower takes great offense to that last one.)

How do patent trolls operate?

Typically, a PAE follows a pattern.

First, these dastardly trolls send letters to businesses - typically a struggling company - and heroically offer to purchase their patents.
         

If that company sells the patent, the PAE then targets their victim. Sometimes, this is all predetermined. Their victim will be another business that is using a process or design or offers a product similar to the patents the PAE acquired from.
         
The troll, as you guessed, then threatens to sue that company for patent infringement.
 

Patent lawsuits can cost upwards of millions. The targeted victim will often agree to pay licensing fees rather than fight the troll in court. The shakedown is complete and the troll makes off with money they’ve essentially swindled.

Who are patent trolls targeting?

Any business or entity can be the object of a patent lawsuit. And obviously, there are legitimate patent law cases filed by legitimate copyright owners against copycats and ripoff artists.

In the tech world, where things move fast and new innovations are adopted quickly, it’s not uncommon for several different companies to inadvertently - read, unknowingly - develop the same idea, at approximately the same time. Especially businesses who are in the same sector. 

Necessity is, after all, the mother of invention.

And the troll feeds on…

• Businesses and entrepreneurs who are facing bankruptcy or otherwise defaulting and are motivated to sell off their assets.
• Small businesses and owners that, no matter their innocence, don’t have the financial resources to challenge patent trolls.
• Other companies holding many patents on which they have not acted commercially.

The dangers posed by patent trolls

Some entities have no choice but to file for bankruptcy in the face of a patent infringement lawsuit.  Some face other financial problems, for example defaulting with creditors, when forced to pay off costly licensing fees to patent trolls. 

Copycat trolls are quick to imitate, ironically enough. One successful troll begets another, and they breed like cockroaches. 

Legitimate businesses are inclined to stay away from sectors prone to trolling. And that is no good for growth anywhere, period.

Because if businesses don't feel comfortable building on existing ideas, new ideas - products, processes and solutions - cannot be innovated. 

These fraud artists and their barely disguised (but sadly hard-to-impeach) cases are a threat to free, global competition and commerce. And existing laws are more often than not unsuccessful in preventing trolls from exploiting their victims.

Protecting Yourself Against Patent Trolls

As you can guess, many victims try simply to ignore PAEs in the hopes they will disappear. And cunningly, that’s often a part of the troll’s strategy. Ignoring them is, effectively, buying them time to build a case while you unsuccessfully wish it away. 

Here are a few ways to be vigilant:

1. If you receive a demand letter from a patent troll, give the letter to a patent lawyer as soon as you can. Not paying attention to a demand letter can be dangerous, especially if a troll is ready to move forward with a lawsuit.
        
2. Do not agree to any licensing arrangements before you talk to a lawyer and a lawyer reads your letter.
    
3. If you have a process, product or other assets you feel make you vulnerable, look into intellectual property insurance, an increasingly commonly available and better-understood form of coverage.

   4.  Don’t let the idea that you might be treated as high risk stop you from protecting what you’re working on - not only from trolls              but from actual copycats. 

And of course, for more information, feel free to visit LOT Network.

Taking the threat of patent trolling seriously and arming yourself accordingly is a further sign that you respect yourself and your work. That immediately positions you as less vulnerable, making you less likely to fall victim to patent trolls. 

Don't get tricked! Have a great October.