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Patent Troll companies

Intellectual Property

A patent troll is someone whether the inventor or a patent holding company that acquires relatively low value patents and then file lawsuits against so-called infringers for huge amounts. The general conception of patent trolls is that such companies hinder the patent system and act unethically. As such the patent troll is an entity that has no real intention of producing the invention commercially, but simply acquires a patent to be able to file lawsuits for royalties. Patent trolls therefore exploit the patent system in a negative manner to make money. Peter Detkin was the first person to use the term to refer to the practice of buying up low value patents and then using such to create lawsuits for income. The word troll in the phrase describes irritating online discussions with the intention of provoking others. Today, however, companies are often labelled as patent trolls when they buy up patents not directly related to their main business. Companies that hold onto submarine, thus hidden patents are also often called trolls. Fortunately the trend is far less prevalent today than a few years ago.

Companies often purchase patents to ensure more income from royalties because their main business does not bring in the desired income. By means of cross license agreements the companies can keep business going. If one wishes to invest in a company, it may very well be a good idea to first review the patent portfolio of the company to determine whether the company is a patent troll. It should ring some alarm bells if the company makes more money from unrelated patents through cross licensing and lawsuits for royalties than through its core business. Some companies act as patent trolls in the sense that they buy up patents that can block the development of technology in a specific area.

Posted on 8 February 2011
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