Fighting patent trolls: predators of the IP world

Corporations that invest heavily in research and development generally have greater value embodied in intangible assets (e.g. patents and other intellectual property) than in tangible ones. Industries adopt varied approaches to manage such intangible assets. Pharmaceutical companies, for example, focus on protecting a key patent, while technology companies have to cooperate with one another because a complex product can incorporate thousands of patents, many of which are held by other companies. Patents have thus become a kind of currency exchanged among such companies.

Recently, however, companies, specifically in the technology sector, have been attacked by non-practising entities referred to as “patent trolls” or “patent sharks”, which are firms with hidden intellectual property that threaten to sue when their rights are inadvertently infringed. The ambush generally appears from an unknown source and corporations are usually unable to identify the opponent until it is too late for them to react. Also, the conventional line of defence, designed for tackling visible competitors, is completely non-applicable for this type of guerrilla warfare.

Patent trolls include non-practising entities that either opportunistically or intentionally profit from payments by companies (for compensation, damages, licence fees or royalty) that inadvertently infringe on the trolls’ IP rights. Interestingly, troll activity is perfectly legal but extremely dangerous to the target corporations. Patent trolls sometimes hold patents based on their own inventions, but obtain licences for, or acquire (from bankrupt companies), patents that they can turn against manufacturers.

TS Sharat is a senior patent engineer and leads the Intellectual Property Support Services Unit at Clairvolex Knowledge Processes, a Delhi-based legal outsourcing firm.