What Do You Do If Your Company Is Sued By A Patent Troll?

Posted on: 12 June 2023

In polite terms, a company that buys up a lot of patents without any intention to create anything or actually use them is called a "non-practicing entity" or NPE. 

In less polite terms, those companies are called "patent trolls." They generally exist solely to make money through litigation, accusing companies of using their patents without permission, even if the patents are vague or questionable. The goal of a patent troll is to force the accused company to pay them money to avoid a costly lawsuit — and they're often very successful.

Although the government is starting to take stock of the issue and may eventually clamp down on NPE practices, businesses don't have a lot of protections right now. That makes it critical to understand what to do if your business is suddenly faced with a threat of a lawsuit by an NPE over patent infringement.

6 steps to Take if Your Company Is Facing a Demand Letter Over a Patent

Trouble usually arrives on the doorstep in the form of a demand letter that insists you have to pay up for your transgression on the NPE's patent. Take the following steps right away:

  1. Get a business law attorney: This is the very first thing you should do because you need experienced legal guidance as you go through each of the next steps. It's also the best way to protect your rights.
  2. Review the claims: Analyze the patent claims asserted. Determine if your product or technology infringes upon the patent in question. Your attorney can help you assess the validity and scope of the patent claims.
  3. Assess your defenses: Work with your attorney to identify potential defenses against the patent troll's claims. This could include arguments of non-infringement, patent invalidity, or other legal and factual defenses.
  4. Gather evidence: Collect all relevant documents, correspondence, and evidence that support your defense. This could include prior art references, technical documentation, expert opinions, or any other relevant information.
  5. Negotiate or settle: Patent trolls often seek quick settlements rather than going to trial. Your attorney can engage in negotiations to reach a favorable settlement agreement, which may involve licensing fees or other terms that are more favorable to you.
  6. Consider challenging the patent: If the patent in question is weak or invalid, you might consider challenging its validity through proceedings at the United States Patent and Trademark Office (USPTO), such as filing an inter partes review (IPR) or ex parte reexamination.

Remember, the specific actions you should take will depend on the details of your situation, so you will want to consult with a commercial law attorney who can provide personalized advice based on your circumstances.