Patent Trolls Toll – Troll Litigation on the Rise

By Daniel Davidson

Move over percentages of marriages that end in a divorce, there is a new percentage in town.  According to a new study of patent litigation released by a Colleen Chien, an assistant professor of law at Santa Clara University, approximately 61 percent (as of December 1, 2012) of U.S. patent lawsuits were filed by Patent Trolls a/k/a patent assertion entities.

Patent Trolls, or patent assertion entities, have no interest in making a product with their patent(s).  Instead, the trolls use the power of their patent(s) to sue which is emphasized by the incredible stat above.  In years past, Patent Trolls only accounted for 45 percent (2011) and 29 percent (2010).  Professor Chien notes in her September 28, 2012 paper titled Startups and Patent Trolls[1]that a majority of the companies that are targeted by Patent Trolls have an annual revenue of under $100 million.

“You Gotta Pay the Troll Toll”

The smaller companies targeted by the Patent Trolls are experiencing hardships due to these lawsuits.  Professor Chien includes that, “a large percentage reported a ‘significant operational impact’: delayed hiring or achievement of another milestone, change in the product, a pivot in business strategy, shutting down a business line or the entire business, and/or lost valuation.”

The disturbing trend of Patent Trolls filing more and more lawsuits each year should have startup companies concerned.  These bullying tactics are costing the economy and making it impossible for some of the companies to expand or even continue.



[1] Chien, Colleen V., Startups and Patent Trolls (September 28, 2012). Santa Clara Univ. Legal Studies Research Paper No. 09-12. Available at SSRN: http://ssrn.com/abstract=2146251 or http://dx.doi.org/10.2139/ssrn.2146251

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