Troll, Patent

Term used to describe entities whose business plan is to buy up patents from bankrupt or defunct companies and then use them to pursue companies in various industries for royalties. The term is a play-on-words as it alludes both to the verb ‘trolling,’ which is a form of drag-fishing and the equipment used for such fishing, but also to an unpleasant Scandinavian goblin. The term was apparently coined between the late 1990 and 2001 by Intel’s Assistant General Counsel for IP, Peter Detkin after the previous terms Intel used, such as “patent extortionists” or “patent terrorists” attracted accusations of libel and slander. Peter Detkin has since helped to found a company, Intellectual Ventures, which buys large numbers of patents and raises revenue by licensing them. The term has also been extended to refer to companies that largely file speculative patents on potential future technology with a view to monetising the patents when the technology is widely adopted.

While the term patent troll has historically been used to refer to pure patent licensing companies, as large technology companies with portfolios of Orphan Patents have started to aggressively seek to profit from those portfolios, it is increasingly suggested large corporations can also engage in troll-like behavior. Who and what is and is not a “troll” is hotly debated, especially as the term can be regarded as very pejorative

Indeed some well known patent trolls responded to use of the term by bringing various expensive to defend defamation claims, mostly against individuals in troll friendly parts of East Texas. In the one instance where such a claim was brought against a well healed defendant in less troll-friendly friendly New Hampshire, the defendant had the resources to get it rapidly dismissed by the court. In response intellectual property professionals have adopted the more anodyne term non-practicing entity or NPE.

A crucial problem in defending against NPEs is that they are typically No-Horse Plaintiffs, i.e., they have little or no commercial presence in the industry effected by the patent, and frequently no commercial activity at all beyond patent enforcement. Thus, while in the technology sector, the risk of counterclaims, cross-claims and countersuits serves to balance different player’s interests, NPEs have usually tried to insulate themselves from any such consequences. At the extreme, patent trolls are seen simply as vehicles to extract nuisance value settlements from practicing entities.