Innovation is the heart of the technology industry in California. Tech companies compete to create new and better ways of doing things. By filing patents for new ideas, tech companies secure their innovations’ place in the system. So-called “patent trolls” found a way leverage this system to gain profit.
Non-practicing entities
“Patent trolls” are non-practicing entities that utilize vague and general patents. They purchase these broad technology patents from companies, but do not use or manufacture the inventions. Instead, they gain patent rights to profit through litigation or licensing fees.
Non-practicing entities often claim patent infringement against other companies, even when it is unwarranted. Tech companies then receive letters threatening legal action unless licensing fees are paid to the non-practicing entities. Most companies end up paying the fees.
Why do tech companies pay the fees?
Companies may end up paying thousands or hundreds of thousands of dollars in licensing fees to non-practicing entities. They may opt to settle, even if they know the infringement claim does not have enough evidence to support it. They pay because it is a cheaper, faster and easier route than litigation. Taking matters to court can take years and millions of dollars to resolve.
Major tech companies have faced this issue for years, but mid-size and small companies are beginning to see letters from non-practicing entities as well. Fortunately, companies now have a better option to challenge unwarranted patent infringement claims.
A cheaper, faster alternative to litigation
The Supreme Court recently confirmed the constitutionality of the inter partes review process, giving tech companies a preferable avenue to face-off with non-practicing entities. Inter partes review gives the U.S. Patent and Trademark Office the ability to conduct trial proceedings to review patent claims.
Tech companies can utilize the process with help from knowledgeable intellectual property attorneys to fight back against unwarranted patent infringement claims at a much lower cost than litigation. The process is also much faster, providing relief for tech companies of all sizes in Silicon Valley and beyond.
