Have you heard of ‘patent trolls’? In 2010, VirnetX, a company with 14 members of staff won a $200 million settlement from Microsoft. Three years later, it claimed a further $23 million from the same company. In February 2016, VirnetX struck again, this time heading after technological giant, Apple, successfully claiming $625.6 million in damages and royalties from them.
So how is David systematically tripping up each Goliath?
We often hear the word “trolling” in association with unwanted and offensive remarks on social media, but it is on the rise in the patent world too. These “intellectual” trolls are not the inventors of the patents they own, and they are often non-practising entities (they do not necessarily manufacture or supply the products or services their patents protect). Rather, they use patents as a business strategy, “bulk-buying” often from companies on the verge of bankruptcy at patent auctions.
Patent trolls purchase patents with the view to highlighting potential infringers, and subsequently prosecuting them far beyond the patent’s actual value, usually by way of sending a myriad of challenging and threatening letters to a range of companies with the hope that one of them will feel duly threatened, and pay up, either in or out of court. Alternatively these trolls may choose to hold patents to keep other companies productivity at a standstill.
Data would suggest this business method is on the rise. 2015 was a big year for patent lawsuits, recording the highest figures in history. What is concerning though, is not the increase in this number, but in the identity of those disputing. According to the Unified Patents Dispute Report two thirds of those lawsuits were filed by non-practising entities (up from 61% in 2014, with a general upward trend in the last five years); it can be assumed a very significant number of these were trolls.
“Trolling” has evolved as a derogatory term, and in the early 90s was considered “the newest scandal in business” but…
Is patent trolling foul play, or a clever and emerging business strategy?
There are two ways to look at it; legally and morally.
Well, it certainly isn’t illegal (but should it be?); if you own the IP rights, you own the right to litigate. However, the patent concept was originally to foster innovation and encourage sharing and 
communication of emerging technology whilst protecting your, often substantial, investment (time and money) into the idea.
The practice of patent trolling is a direct attack on technological growth. The patent trolls who own the IP do not necessarily have any intention of using or developing the technology. Not only do they not directly contribute to scientific and technological development or usage, patent trolls who own IP actually directly stunt growth in this area, by filing lawsuits and therefore withdrawing money from innovative sectors.
At present, there is no obvious way that companies and inventors can protect themselves from these IP sharks; but should there be?
For the time being, watch out Samsung. The likes of VirnetX are circling.