IP Folklore 101: What’s a ‘patent troll’?

July 12, 2013

Evan Vucci/Associated Press

Evan Vucci/Associated Press

Fairly often, when I am exploring intellectual property issues to write about, I come across the pejorative “patent troll.”

Like many terms, it means different things to different people, but I thought it might be good to explore what most people mean when they use this derogatory phrase.

Generally speaking, a patent troll — or “non-practicing entity” or “patent assertion entity,” if you want to be all PC about it — is a company or person that buys up patents and then uses them to sue others.

Patent trolls have no research and development departments, no product innovation teams and no real mission to improve any industry in any way. In the most egregious cases, they’re shell companies that exist only to sue.

And in some cases, “sue” can be dangerously close to “extort.” One infamous so-called patent troll, Innovatio, once threatened to sue about 8,000 coffee shops, claiming their WiFi systems infringed in patents Innovatio had bought. Most people agreed that the coffee shops were not actually infringing on anything, but many opted to pay Innovatio up to $5,000 anyhow, since that was cheaper than litigating.

So, is this illegal? Oftentimes, no.

A patent is a legal monopoly of limited duration. In order to use patented material properly, you have to have the patent-holder’s permission. Usually, that means paying the patent-holder, too. It does not matter whether you invented the patented material or just bought the patent from the person who did; if you hold a patent, you’re the piper users must pay.

What people object to about patent trolls is the aggression patent trolls display in suing just about anything that moves. This siphons away resources that businesses could be using to do, you know, actual business.

They also point out that something about patent trolls doesn’t pass the smell test. Our intellectual property regime was configured to reward inventors, creators and innovators. Patent trolls are not any of these things. They aren’t enriching science, art or industry in any way at all, so by benefitting from patent laws, are they gaming the system?

Of course, not passing the smell test isn’t grounds for legal action (can you imagine if it were, though?). There is much clamor about “patent reform” that might curb patent trolling, but most of the proposals have a long way to go when it comes to gaining traction.