What Is a Patent Troll?

If you're operating a small business, you might want to keep your eye out for trolls — patent trolls, that is.

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While the patent system was designed to help inventors keep control of their own intellectual property, patent trolls skirt the rules to make money through lawsuits for patent infringement and don't actually create anything innovative.

A patent troll is someone who holds one or more patents for the sole purpose of suing anyone who infringes on those patents, even accidentally. Patent trolls don't typically produce, use or market the patented item themselves. Their only purpose is to use the legal system to make money suing small businesses or individuals who inadvertently violate the patent.

What Do These Trolls Do?

Patent trolls often buy up patents from struggling companies or file patents for common items that don't have an existing patent. They then demand fees from or pursue legal action against companies using the patented items.

One early patent trolling example involved a man named George Selden, who held patents on automobiles in the early 1900s but never made vehicles himself. Instead, he forced automotive manufacturers to pay him royalties for using the patents he owned.

Another patent troll example includes companies that filed for multiple computer software patents using broad language that could cover multiple technological inventions. These companies later sued companies that made software that might possibly fall under the definition in the patent.

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Is Patent Trolling Legal?

By a strict patent troll definition, patent trolling is completely legal in the United States. These individuals and companies operate by taking advantage of legal loopholes to make money through lawsuits. Keep in mind that patent troll isn't considered a legal term. The U.S. court system, including the Supreme Court, doesn't recognize a legal difference between a practicing entity, which holds patents actively in use, and those called nonpracticing entities, which hold patents strictly for pursuing legal cases.

How Are Patent Trolls and Patent Sharks Different?

A patent shark and patent troll are basically the same thing, called by a different name. Patent sharks often scoop up inexpensive patents and begin suing businesses using or producing the patented item for alleged infringement. Another name for a patent troll is a patent assertion entity.

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How to Protect Yourself From Patent Trolls

Protecting your business from patent trolls involves staying aware of who holds the patent on equipment and goods your company uses. Good business practices involve tracking patents, trademarks and copyrights your business owns or licenses.

Paying licensing fees to the legitimate owner of a patent protects you from claims of unauthorized use and patent infringement lawsuits. Keeping a lawyer on retainer to help you both combat patent trolls and enforce patents you hold is often a worthwhile business expenditure.

If bad faith patent trolls attack your business, one possible defense is to make sure the patent is valid. The patent system is designed to allow individuals and companies to challenge patents if they believe a patent is unfair. In some cases, the U.S. Patent and Trademark Office issues patents inappropriately, so your lawyers may be able to argue that the patent trolls hold an invalid patent.