Intellectual property (2023): Patent trolling (Part One)

In international law and business, patent trolling or patent hoarding is a categorical or pejorative term applied to a person or company that attempts to enforce patent rights against accused infringers far beyond the patent's actual value or contribution to the prior art, often through hardball legal tactics (frivolous litigation, vexatious litigation, strategic lawsuits against public participation (SLAPP), chilling effects, and the like). Patent trolls often do not manufacture products or supply services based upon the patents in question. However, some entities which do not practice their asserted patent may not be considered "patent trolls" when they license their patented technologies on reasonable terms in advance.

Other related concepts include patent holding company (PHC), patent assertion entity (PAE), and non-practicing entity (NPE), which may or may not be considered a "patent troll" depending on the position they are taking and the perception of that position by the public. While in most cases the entities termed "trolls" are operating within the bounds of the legal system, their aggressive tactics achieve outcomes contrary to the origins of the patent system, as a legislated social contract to foster and protect innovation; the rapid rise of the modern information economy has put the global intellectual property system under more strain.

Patent trolling has been less of a problem in Europe than in the United States because Europe has a loser pays costs regime. In contrast, the U.S. generally employs the American rule, under which each party is responsible for paying its own attorney's fees. However, after the U.S. Supreme Court's decision in Octane Fitness, LLC v ICON Health & Fitness, Inc on April 29, 2014, it is now easier for courts to award costs for frivolous patent lawsuits.

Etymology and definition.

The term patent troll was used at least once in 1993, albeit with a slightly different meaning, to describe countries that file aggressive patent lawsuits. The 1994 educational video, The Patents Video also used the term, depicting a green troll guarding a bridge and demanding fees. The origin of the term patent troll has also been variously attributed to Anne Gundelfinger, or Peter Detkin, both counsel for Intel, during the late 1990s.

Patent troll is currently a controversial term, susceptible to numerous definitions, none of which are considered satisfactory from the perspective of understanding how patent trolls should be treated in law. Definitions often include a party that does one or more of the following:

Purchases a patent, often from a bankrupt firm, and then sues another company by claiming that one of its products infringes on the purchased patent;

Enforces patents against purported infringers without itself intending to manufacture the patented product or supply the patented service; (some argue this could be true even for the original inventor, whereas other draw a clear distinction on this point);

Enforces patents but has no manufacturing or research base;

Focuses its efforts solely on enforcing patent rights; or

Asserts patent infringement claims against non-copiers or against a large industry that is composed of non-copiers.

The term "patent pirate" has been used to describe both patent trolling and acts of patent infringement. Related expressions are "non-practising entity" (NPE) (defined as "a patent owner who does not manufacture or use the patented invention, but rather than abandoning the right to exclude, an NPE seeks to enforce its right through the negotiation of licenses and litigation"), "patent assertion entity" (PAE), "non-manufacturing patentee", "patent shark", "patent marketer", "patent assertion company", and "patent dealer".