by Mallun Yen, Executive Vice President, RPX Corporation
My last post was a quick overview of the “invisible” business risk of patent infringement litigation. Those of you who read that post know that I use those quotation marks ironically. The problem isn’t widely covered or discussed, but it definitely isn’t invisible: in 2016 there were more than 3,500 active patent infringement campaigns and since 2010 more than 20,000 companies have experienced this kind of patent-based legal attack at least once.
Every year companies—ranging from multi-billion dollar multi-nationals to emerging start-ups—collectively spend multiple billions of dollars on legal fees and settlements to resolve these disputes. It’s a staggering burden.
The threat comes both from companies protecting their intellectual property and from so-called patent trolls, which buy and litigate patents opportunistically in predatory licensing campaigns. Trolls represent the vast majority of the risk.
In both cases, the risk rises in successful and growing sectors of the tech-enabled economy. Trolls, in particular, follow market trends, which is why growing numbers of SaaS-model companies are being targeted and are starting to feel the significant frustration and expense of predatory patent infringement claims.
It’s a bleak picture, but the situation isn’t hopeless. As I wrote last time, there are ways to fight back. Patent risk can be addressed and mitigated. I cited three approaches for at-risk companies: arm yourself with information, don’t fight alone, and buy appropriate insurance for your particular level of risk.
I want to spend the rest of this short post exploring the first tool: knowing as much as possible so you can make rational, data-based decisions when facing a patent attack. It’s the old saying “know thy enemy” put into practice, and there are lots of resources to gain that knowledge.
The US Patent and Trademark Office, for example, provides a resource page for companies that have been sued for patent infringement. My company, RPX, also offers a search platform that links information from federal litigation dockets, patent office validity challenges, litigation party profiles, detailed patent metadata, and patent ownership assignments, all in one central interface.
It’s no exaggeration to say data helps. Patent licensing attacks are ultimately legal negotiations, and data lets you negotiate—and make strategic decisions—from a position of strength.
We see this often at RPX. For example, two of our insurance clients—an e-retailer and an online marketing company—each received patent assertion letters from the same patent troll threatening multimillion-dollar litigation. We suggested the clients wait to respond until they had more information. After a few days of research, including searching our database, a clearer picture emerged of the scope, nature, and credibility of the threat.
While the assertion letters had at first appeared to be credible, analysis revealed that the plaintiff, as trolls often do, had sent assertion letters to dozens of online retailers without considering their business models or even if they used the patented technology at issue. This troll was fishing for quick settlement dollars from uncertain and uniformed defendants.
In this particular case, waiting and arming with information paid off. Our analysis led in-house counsel not to engage with the troll. No further assertion letters arrived and no related follow-up lawsuits have been filed. Knowing the enemy saved these two companies tens of thousands of dollars that they would otherwise have spent for outside counsel to investigate, manage, and resolve even a low-quality assertion letter, such as this one.
So clearly patent risk can be addressed effectively at the low end of troll attacks. But what about more sophisticated campaigns based on better patents? More on this in my next post.
Mallun Yen is Executive Vice President of RPX Corporation, which provides patent risk management solutions to nearly 350 companies. RPX (Nasdaq: RPXC) has saved its clients more than $3.4 billion to date in avoided legal and settlement costs through defensive patent acquisition, liability insurance, and market intelligence and strategic advisory services. To start protecting your company against patent risk, click here.
