Attorney General Herring's Patent Troll Unit
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What is a Patent Troll?
In general, patent holders fit into one of two classes: practicing entities, those who use, manufacture, or sell a product covered by their patent; and non-practicing entities, those who sell their patents, license their patents for a fee, or assert infringement of their patents to collect damages.
The term patent troll, or patent assertion entity, refers to a subset of non-practicing entities that misuse the patent system for personal gain. A patent troll profits from a patent by sending bad faith demand letters to alleged infringers. Common bad faith enforcement practices employed by patent trolls include failing to conduct a reasonable investigation to determine whether the accused product actually infringes before sending a demand letter, making baseless allegations of patent infringement, sending deceptive or misleading demand letters, and offering a license at a nuisance price.
What is Patent Trolling?
Patent litigation is notoriously complex, expensive, and unpredictable—a reality that patent trolls seek to exploit. Patent trolling refers to the practice of mass mailing demand letters containing bad faith assertions of patent infringement, requests for unjustified licensing fees, and threats of litigation if the recipient does not pay the licensing fee. Those who engage in patent trolling may assert overly broad or vague patents, which they claim cover commonly used technologies. By design, the cost of defending the threatened litigation, and possibly the cost of evaluating the merits of the assertion, exceeds the requested licensing fee.
Patent trolling places the target, or the recipient of the bad faith demand letter, in a particularly difficult position. The target must decide whether to pay the licensing fee while facing the threat of expensive patent litigation. Many targets do not have the financial ability to defend against a patent infringement lawsuit or to bring an action challenging the assertion. If the target simply ignores the demand letter they face the possibility of increased damages in a later infringement action. While many targets receive meritless assertions of patent infringement, these financial considerations lead some targets to pay the licensing fee just to make the problem go away.
The Patent Troll Unit has created an educational brochure on patent trolling and the recently-enacted Virginia law prohibiting bad faith assertions of patent infringement. You may access the brochure by clicking here.
Identifying Patent Trolls
Bad faith assertions of patent infringement are the hallmark of patent trolling. Unfortunately, many recipients of demand letters struggle to determine whether they have received a bad faith assertion of patent infringement. Whether an assertion of patent infringement violates the Virginia statute prohibiting bad faith assertions requires an examination of all circumstances surrounding the assertion.
The statute allows consideration of several circumstances that suggest a person has made a bad faith assertion of patent infringement, including, but not limited to:
- The demand letter does not contain basic information about the patent asserted (e.g., patent number, patent owner’s name or address)
- The patent owner fails to conduct a reasonable analysis of whether the alleged infringer’s products actually infringe the patent in question before sending a demand letter
- The demand letter does not identify the specific areas in which the patent claims cover the alleged infringer’s products, services, or technology
- The patent owner offers to license the patent at a price not based on a reasonable estimation of the value of such a license
- The demand letter contains a deceptive assertion of patent infringement
- The patent owner threatens legal action that that cannot legally be taken or that is not intended to be taken
- The demand letter asserts infringement of a patent not in force at the time of the allegedly infringing conduct
- The demand letter asserts infringement of a previously invalidated patent
The statute also lists several indicators that suggest a person has not made a bad faith assertion of patent infringement, including, but not limited to:
- The patent owner conducts a reasonable investigation and determines that the alleged infringer actually infringes the patent in question before sending a demand letter
- The patent owner makes a substantial investment in the development, production, or sale of a product covered by the patent
- The patent owner has successfully enforced the patent (or a substantially similar patent) through litigation
- The person asserting infringement is an institution of higher education (or an affiliated technology transfer office)
Disclaimer: The Office of the Attorney General provides this information to assist you in deciding whether to report a potential violation of Virginia’s bad faith assertions of patent infringement statute. This information does not constitute legal advice or provide a definitive answer as to whether any particular assertion of patent infringement violates Virginia's bad faith assertions of patent infringement statute.