Patent Trolls: What Are They and How Can They Harm Your Business?

naperville business law attorneyPatents allow inventors and entrepreneurs to prevent other companies from manufacturing, selling, or using their patented inventions for a set period of time. Governments grant these rights in exchange for detailed public disclosure of the innovation. A patent is essentially a temporary monopoly granted to a business or individual that allows them to profit from their unique innovations. When used correctly, patents encourage innovation by rewarding creativity and novelty while simultaneously fending off intellectual theft. However, the U.S. patent system is not infallible, and it can be abused.

Businesses have a right to protect their intellectual property, including pursuing a patent infringement claim against a party using their patent. However, some companies exploit the US patent system by using patent infringement claims merely to turn a profit. These “non-practicing entities,” sometimes called “patent trolls,” file claims without intending to use the patent to develop a service or product. Their actions are not illegal, but many consider these practices unethical, especially when patent trolls target small businesses.

Patent Trolls Acquire Patents and Then Sue for Patent Infringement  

Patent trolls buy or register multiple patents – many of which are vague or overly broad. Then, when another party invents a service or product, the patent troll files a lawsuit claiming that the inventor is using their patent.

To avoid the possibility of litigation costs, massive damage awards, or an exclusion order from the United States International Trade Commission (USITC), most businesses sued by patent trolls settle or agree to pay licensing fees. This is exactly what the patent trolls are banking on.

How to Protect Your Small or Medium-Sized Business from Intellectual Property Lawsuits

The threat of lawsuits impedes innovation and hurts small businesses. Over half of the companies targeted by patent trolls have annual revenues of less than $10 million per year. Innovators are forced to walk on eggshells, constantly worrying about the threat of legislative blackmail.

If you own a small or medium-sized company, it is crucial to take proactive measures to protect yourself against patent trolls. Work with a business law attorney familiar with intellectual property laws who can help you protect your company and handle any demand letters or infringement claims you receive.

Contact the Naperville Business Law Attorneys at the Gierach Law Firm

 Unfortunately, many small and mid-sized companies find themselves targets for bad actors. Make sure you have a legal advocate in your corner.

The Naperville business lawyers at the Gierach Law Firm provide dependable legal guidance to business owners and business leaders. We also offer an Outsourced General Counsel program which is perfect for companies that are too small for in-house legal counsel but still want the peace of mind that comes with having a lawyer on their team.

Call 630-756-1160 today for a confidential consultation.


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Please note: These blogs have been created over a period of time and laws and information can change. For the most current information on a topic you are interested in please seek proper legal counsel.

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