What is patent trolling?
"Patent trolling" is a term used to describe entities — often called non-practicing entities or patent assertion entities — that acquire patents primarily to demand licensing fees or file infringement lawsuits, rather than to make or sell products using the patented technology. Critics argue the practice can pressure businesses into costly settlements even over broad or low-quality patents.
How the Practice Typically Works
A common pattern involves an entity acquiring a portfolio of patents, often ones covering broad or ambiguous technology concepts, and then sending demand letters to numerous businesses alleging infringement.
The entity typically offers a licensing fee that is set lower than the expected cost of litigation, which creates pressure for businesses to settle regardless of whether the underlying infringement claim would actually hold up in court.
Why It's Controversial
Critics distinguish this behavior from legitimate patent enforcement by inventors or companies that actually develop and sell products using their patented technology, arguing that the practice exploits the cost asymmetry between a well-funded patent holder and a defendant business.
The debate is especially pronounced around software and broad technology patents, where critics argue vague or overly broad claims should never have been granted in the first place, while patent holders counter that enforcement of validly granted patents is a legitimate right.
How Businesses Typically Respond
A business receiving a demand letter typically has its patent counsel evaluate the validity of the patent, whether the accused product or service actually falls within its claims, and whether defenses like prior art exist.
Some industries have formed defensive patent pools or purchased litigation insurance specifically to address these threats, while individual businesses still sometimes settle simply to avoid the cost and disruption of litigation, independent of the claim's actual merit.
Efforts to Address the Issue
Lawmakers and courts have pursued various changes over time, including adjustments to fee-shifting rules and venue requirements, aimed at reducing abusive patent litigation without undermining legitimate patent enforcement.
There is no single fix, and the practical landscape continues to shift with new legislation, court rulings, and administrative patent review procedures, so the situation is best understood as an ongoing and jurisdiction-dependent policy debate.
- What should I do if I get a patent demand letter?
- Don't ignore it, but also don't rush to settle. Consult a patent attorney promptly to evaluate the patent's validity, whether it actually applies to what you're doing, and what response deadlines apply.
- Is every non-practicing entity a patent troll?
- No. Some non-practicing entities legitimately license inventions developed by universities or individual inventors who don't manufacture products themselves. The "patent troll" label is often used pejoratively and its application to any specific entity can be contested.
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