What are Patent Trolls and Non-Practicing Entities (NPEs)?

Is a Patent Troll Trying to Sue You?

Innovation thrives when creativity meets protection. Securing intellectual property (IP) is vital for small business owners and tech innovators. However, a looming challenge remains in the form of patent trolls and non-practicing entities (NPEs). These entities exploit the patent system, often at the expense of innovation and emerging businesses. 

The patent attorneys at Emerson Thomson Bennett will explore who patent trolls and NPEs are, their effects on businesses, and how you can protect your intellectual property.

What Are Patent Trolls?

A “patent troll” refers to a person or organization that acquires patents with the primary goal of profiting from lawsuits rather than innovation. They typically use the following tactics:

• No Product Development: Patent trolls don’t create products or offer services based on their acquired patents. 
• Acquisition of Weak Patents: They purchase patents, often considered overly broad or poorly written, from struggling businesses. 
• Litigation-Based Revenue: They threaten companies with lawsuits for alleged patent infringement and demand licensing fees. 

This practice creates a cycle where businesses, rather than engaging in costly legal battles, often opt to settle—even when claims are baseless.

What Are Non-Practicing Entities (NPEs)?

Non-practicing entities (NPEs) acquire patents but don’t use them to manufacture products or provide services. While this behavior often overlaps with patent troll activities, not all NPEs are problematic. For instance, some NPEs focus on licensing out patents legitimately to companies seeking access to existing innovations. Some famous examples of NPEs would be InterDigital and the Industrial Technology Research Institute (ITRI).

While patent trolls fall under the umbrella of NPEs due to their lack of product development, many NPEs contribute positively by facilitating access to patented technologies without requiring companies to create them independently.

The Impact of Patent Trolls and NPEs on Small Businesses and Tech Innovators

Patent trolls and NPEs create significant challenges for businesses, particularly those in the tech sector. Here’s how they affect innovation and operations:

1. Discouraging Innovation: The constant threat of litigation creates uncertainty for small businesses. This discourages risk-taking and innovation, particularly for startups prioritizing growth over legal battles.
2. Financial Strain: Patent lawsuits are expensive, draining valuable resources that could otherwise go toward R&D. Even a groundless lawsuit can cost a business thousands in legal fees.
3. Stifling Competition: Patent trolls exploit loopholes to monopolize innovation. This makes it harder for emerging businesses to compete in an already challenging market.
4. Impact on Human Resources: Time spent dealing with legal disputes removes leadership focus from growth initiatives, customer acquisition, and strategic planning.

Strategies for Protecting Against Patent Trolls and NPEs

Protecting your business from patent trolls requires a keen understanding of intellectual property law and proactive measures to shield your assets.

1. Conduct a Thorough Patent Search

Before launching any product or service, conduct a comprehensive patent search to ensure you’re not unintentionally infringing on existing patents. Our patent attorneys can help with this process.

2. Obtain Strong Patents

Make sure your innovations are properly patented to reduce exposure to frivolous lawsuits. Ensure that your patent application is detailed and well-drafted to prevent exploitation.

3. Invest in Legal Support

Collaborate with our experienced IP attorneys to develop strategies for dealing with any threats or claims. Having a legal team on standby can save time and money.

4. Utilize Defensive Patents

For larger businesses, defensive patenting involves acquiring patents simply to prevent patent trolls or competitors from exploiting those ideas. Our attorneys can help you file and maintain defensive patents.

5. Educate Your Team

Train your leadership and employees on the basics of IP and patents. Understanding these rules helps avoid potential pitfalls.

6. Leverage Patent Insurance

Consider patent liability insurance to cover potential costs from patent troll lawsuits.

The Importance of Patent Protection for Small Businesses and Innovators

Securing IP protection is crucial for safeguarding your innovation against opportunistic entities. Patents offer the following benefits:

• Exclusivity: A patent grants you exclusive rights to your invention, ensuring that competitors cannot profit from your hard work. 
• Monetization: Patents provide opportunities to license your technology, turning your innovation into an additional revenue stream. 
• Reputation and Credibility: Patents enhance your credibility in the industry, attracting stakeholders and potential investors. 
• Legal Recourse: With a robust patent, you can legally defend your innovation against misuse.

The Role of Patent Prosecution Services in IP Protection

Partnering with an experienced patent prosecution service can be a game-changer for small businesses, particularly those new to the IP landscape. These services help you:

• Draft and File Patents: Patent attorneys help craft high-quality applications that reduce the risk of infringement claims or legal disputes.
• Navigate Patent Law: Our attorneys understand the nuances of patent law, ensuring full compliance while maximizing the effectiveness of your protection.
• Expand Globally: If you plan to scale internationally, these services can facilitate global patent filings to safeguard your innovation in foreign markets.

Overcome Patent Trolls and NPEs With Help From ETB Law

The challenges posed by patent trolls and NPEs may seem daunting, but they’re not insurmountable. By securing IP protection, staying informed, and employing sound legal strategies, small businesses, and tech innovators can continue to create and thrive without falling prey to exploitative tactics.

If you’re ready to take the next step in protecting your hard-earned innovation, we’re here to help. At Emerson Thomson Bennett, we focus on patent prosecution services tailored to your unique needs. Contact us today to schedule a consultation and work towards safeguarding your creations and ensuring your business remains a leader in its industry.