Wednesday, May 27, 2015

Trolls

Link

As technology has and continues to become a more important factor across industries of all size, companies looked to adapt to the new economy and provide better, more efficient products for costumers. But patent trolls have capitalized on the trend. PAEs were responsible for 62% of patent suits filed in 2012 and they are broadening their target past traditional large tech companies and on to smaller, easier prey with less capital and resources. End-user patent suits, which is the practice of targeting businesses that use a piece of patented technology with low quality patents owned by troll companies, are on the rise. Non-tech sectors, such as restaurants, retailers, even funeral homes, are accounting for a larger share of total patents initiated by PAEs, increasing to over half in 2012. The damage caused by trolls cannot just be measured in lost revenue. There are incalculable opportunity costs, lost operational time and undue stress on startup founders.

And then there's the exorbitant legal cost regardless of whether the defending company wins at trial. Average defense cost in a patent case is reportedly over $1.5 million through the end of discovery and about $2.8 million through final disposition. It's an amount few startups can afford. In fact, extorting settlements with threat of high litigation cost is exactly the strategy employed by patent trolls in almost all cases.