Thirteen Years in the Trenches With Patent Trolls

Every week, dozens of oddly named shell companies file patent infringement lawsuits around the country. These mystery LLCs demand millions of dollars in payments from the companies they sue, and often, they seek to shut down products altogether—to shut off websites, turn off online services, wipe products off shelves. 

These are the “patent trolls.” They own patents, and claim to represent the interests of inventors. But they’re using a definition of “invention” that would be unrecognizable to any American growing up on stories about Ben Franklin or the Wright brothers. 

What they have invented is a way to leverage the US litigation system. Because of the multi-million dollar cost of defending patent cases in court, defendant companies both large and small tend to pay out settlements. The settlements can range from a few thousands dollars to hundreds of thousands of dollars. Many of these patent demands are directed at small businesses, even one-person businesses. 

Some of the more infamous examples from the past decade include the patent troll Lodsys going after app developers and demanding a half-percent of their revenue, and the “scan-to-email” patent demand letters that went out to tens of thousands of small businesses in 2013. 

In aggregate, the economic impact is massive. A 2012 study estimated the direct legal costs of patent trolling at $27 billion annually. And the false invention narrative that patent trolls create do terrible damage to our understanding of how real invention works. 

Why are our courts filled with patent litigation that doesn’t make much sense, is crowded in secrecy, and obviously hurts the public interest? Why can companies with just a handful of patent-savvy investors get away with trying to siphon off one percent of iPhone revenue, or sue a big TV company seeking 3.5 percent of their video-streaming revenue

In this newsletter, I’ll focus on three types of posts: 

  • Analysis of patent lawsuits that get filed in a month, or a week, or a day. How many lawsuits are filed by trolls? Where are the cases filed? Who owns the patents, and what are they claiming they “invented?” 

  • In-depth exploration of a particular patent case. I’ll look closely at a patent case, usually one that goes to trial or has an extensive litigation record. 

  • Essays that explore why our patent system is broken, and how to fix it. 

I’ve been reporting on patent trolls since I first took a job in the legal press, and they’re still on the march. I’ve written about patent litigation since 2007, as a journalist for The American Lawyer magazine group, Ars Technica, the AFP, and as an advocate at the Electronic Frontier Foundation. 

Thirteen years later, the never-ending barrage of bizarre and secretive patent lawsuits has become a new “normal” for the legal world. Many lawyers, and other patent system insiders, make serious money from the modern reality of non-stop patent threats. That’s true not just for those working for the trolls and the big patent-owners, but also for the armies of lawyers that must be arrayed against them. 

In just one week earlier this month, at least nine of these companies filed patent lawsuits. You probably haven’t heard of Geographic Location Innovations LLC, DigiMedia Tech LLC, or Transcend Shipping Systems LLC. But you have heard of the companies they’re suing: Bridgestone Tire, Estee Lauder, Panasonic, and shipping giant Maersk, among others. They’re also suing smaller companies like Government Employees Credit Union, a credit union in El Paso, Texas. 

With 2020 coming to a close, patent troll lawsuits are as broad as ever, their targets as just as varied, and their claims are just as outlandish as they were when I first learned what a “patent troll” was. 

At the moment, there’s no way to completely stop this patent scam. But we can work together to stop the patent trolls’ worst excesses. Right now, patent trolling has been made legal by our federal courts. That doesn’t make it right. We can’t let the worst abusers of the patent system march into Congress and claim they wear the mantle of “innovation.” Publishing a more complete public record about the abuses of the patent system will help us all learn more—and build a community that will fight back and win this debate. 

Three important caveats before we start: 

I don’t make money off patents or patent disputes, either on offense or defense. The only stock I own is in broad index funds. 

  • I look at patent disputes as a concerned citizen. I am not a lawyer.

  • This newsletter is a personal project and reflects solely my own personal views, not those of any of my employers, past, present or future. 

I hope you’ll subscribe and join me on this journey!

Photo: Federal Courthouse and Baxter Building in Marshall, Texas CC-BY Nicolas Henderson