Patent-assertion entities, also known as patent trolls, are shell companies that are not involved in the production or manufacturing business of any kind. These companies acquire patents that are broad and would be required for other companies to function, produce, and manufacture. The primary source of capital for these companies are demands made to other companies by claiming patent infringement and asking for payments for the use of the same. These patent trolls incline to target smaller companies as the costs of defending a patent suit would be too high for them, thereby increasing the probability of a settlement, which is the ultimate goal of their business model. However, another aspect of their business model is to target companies, which would have the capacity to pay to settle. Therefore, the target area is vast, and the effect of these patent trolls has crippled businesses in some instances. Any person who is targeted by a patent troll must act with prudence by taking into account some of the things that might come to aid.
1. Ascertain whether it’s a patent troll or a legitimate notice
It is vital to ascertain whether the notice sent to your company was valid or frivolous. This validation can become achievable by looking at aspects such as who posted the letter, whether it is a well-known company, whether the notice asks for an extortionate amount of money. One must look at the letter’s language, the frequency of these letters, and whether there are variations in the amount demanded with each following letter.
2. Patience
In the instance context, tolerance does not refer to letting the trolls act arbitrarily while your business gets affected. However, the modus operandi of most of these companies is to send out bulk notices and then narrow their target areas upon companies, which respond. Therefore, there lies a possibility that the patent trolls forget or ignore the business, which has not responded. However, the owner must keep in mind that if the notices persist, then the same must be acknowledged and get advice from reliable sources.
3. Research
Research concerning the entity which is sending these notices helps in determining whether the entity is likely to sue or does it primarily aim at settlement. Therefore, one must gather primary data about the patent, the company, its past legal history, the persons who work behind the veil, etc., this would provide a trajectory to how the company operates in such situations.
4. Seek Legal Advice
It is beneficial that the victim acts following the advice given and responds only through a lawyer. Even if these notices have deadlines, which may seem threatening, the response through a lawyer will ensure that any information that a person may give out while communicating with patent trolls is not used against him.
5. Do not be desperate to settle
It is a common mistake made by companies that are subject to patent trolls. It acts contrary, as even though the total cost of settling would be lower than defending a lawsuit, but a rush to settle would indicate that the owner would be willing to pay more. This, in turn, would allow the patent trolls to increase their demands; therefore, quick settlements could turn counter-productive.
6. Ask the right questions
While communicating about a patent troll, one must try to gather the information concerning how the infringement of patent has occurred. Further, trying to obtain a claim chart as early as possible in this case would be helpful. Asking specific questions on the case, the parties involved, the evidence upon which the other party is relying, etc. should be the primary focus while making any communications.
7. Try to invalidate the claims
A patent for which the other party is claiming rights is generally broad, therefore, by doing an in-depth search about whether any contradictions exist within the patents or whether it falls under the prior art. This approach would shift the burden on the trolls as your case would become more robust, and the likelihood of coming to settlement faster would increase.
8. Express inability to pay for the settlement
The primary reason as to why patent trolls attack companies is to make them pay by way of an agreement or by granting licenses. However, if the company shows that they do not have the resources to deal with either an expensive settlement or a suit, it might result in the patentee not pursuing the case.
9. Find allies
Since these patent trolls target many companies at once, it would be beneficial to find who else has been targeted, getting into contact with them, and charting out a plan of action. If the case goes to court, it might even help by dividing the costs of the suit. Further, allies might not just be in the form of other targets but also organizations that value innovations and are fighting against patent trolls.
These are various ways by which one may combat a patent troll. The Indian legal system has a strong basis to combat patent trolling, and companies should not panic if they receive such notices. It is more difficult for these patent trolls to thrive here due to the tendency of the Indian courts not to grant injunctions easily. After awarding of damages, the same would not be ideally sufficient to sustain this model of working. Further, patent trolls require a certain period to acquire patents in a specific area and the technology adaptation to mature. The fact that also needs to be considered is that these entities do not produce, manufacture, or carry out any business. This damage is not consistent with the Indian patent system as the law monitors the working of patents, and if the patent is not in compliance, it would be given a compulsory license within three years. Therefore, while dealing with a patent troll, it is necessary to handle the entire situation with a calm mind and a planned approach.
