Legal Definitions - patent troll

A patent troll is a derogatory term used to describe an individual or company that acquires patents primarily for the purpose of threatening others with legal action for alleged infringement. These entities typically do not manufacture products or offer services based on the patents they hold. Instead, their business model revolves around demanding licensing fees or settlements from companies they accuse of using their patented technology, often leveraging patents that are broad, vague, or cover fundamental concepts.

Here are some examples illustrating the concept of a patent troll:

• Example 1: Software Application

  Imagine a small startup, AppGenius Inc., develops a highly successful mobile application featuring an innovative gesture control system. A company called PatentVault LLC, which has never developed or sold any software itself, acquires a portfolio of old software patents. PatentVault then sends a demand letter to AppGenius Inc., claiming that their app's gesture control infringes on one of PatentVault's broadly worded patents from the early 2000s. PatentVault demands a substantial licensing fee or threatens a costly lawsuit, even though their patent's original contribution to the field was minimal and they have no intention of ever creating an app.

  This illustrates a patent troll because PatentVault LLC is not innovating or producing anything. Instead, it uses a broadly interpreted, older patent as a legal weapon to extract money from an active, innovating company (AppGenius Inc.) through the threat of litigation, rather than contributing to technological advancement.

• Example 2: Manufacturing Component

  Consider Component Holdings Inc., a company that purchases a patent for a generic, widely used fastening mechanism found in various consumer electronics. Component Holdings Inc. then identifies several established electronics manufacturers who incorporate a similar fastening mechanism in their products. Without ever having produced a single electronic device or component themselves, Component Holdings Inc. sends cease-and-desist letters and infringement notices to these manufacturers, demanding royalties for using "their" patented design. The manufacturers face the choice of paying a settlement or enduring expensive legal battles.

  Component Holdings Inc. acts as a patent troll by acquiring a patent for a common component and then using it to demand payments from actual manufacturers. Their strategy is to profit from legal threats over a patent they do not utilize for production, rather than contributing to the manufacturing industry.

• Example 3: Basic Research Technique

  Suppose BioClaim Assets acquires a patent for a very general laboratory technique used in genetic sequencing, a method that has become standard practice across many research institutions. BioClaim Assets, which operates no labs and conducts no research, then begins sending legal notices to university research departments and small biotech startups. They claim infringement and demand licensing fees for using this fundamental technique in their ongoing research and development efforts, forcing these entities to divert funds from scientific discovery to legal defense or settlement payments.

  BioClaim Assets exemplifies a patent troll because it holds a patent on a widely adopted research method without engaging in any research or development itself. Its business model is to profit by asserting infringement against entities that are actively innovating and contributing to scientific advancement, using the threat of costly litigation to secure financial settlements.