Technology companies of all stripes continue to drive innovation and grow the economy, but increasingly they face a new obstacle to success, and we are all paying the price. Patent trolls - companies that buy the rights to tech patents - target companies with lawsuits, often sending thousands of assertion letters at a time in hopes of scaring businesses into settling. Litigation can cost companies millions of dollars that could otherwise be used for hiring new employees, creating new services and products, and ultimately helping grow the U.S. economy.
Small tech startup CarShield recently got an assertion letter from a patent troll and fought back. “Go to court or pay $250,000 to settle.” Those words were written as an ultimatum to NYC startup, CarShield, by the patent troll, 911 Notify, LLC. This group had been granted a patent on “notifications” and believed CarShield overstepped boundaries.
Surprisingly, this kind of extortion is becoming more common. The recent increase in lawsuits by patent trolls have reached unprecedented levels. More than 6,000 patent lawsuits were filed in 2013; 12-percent increase from the previous year. Last April, patent trolls filed 184 lawsuits in a single day as an act of rebellion toward Senate’s Innovation Act; a bill to shield businesses from patent trolls.
Due to help from the Brooklyn Law Incubator and Policy (BLIP) Clinic, a participating firm in The Law School Patent Troll Defense Network administered by the Application Developers Alliance, 911 Notify dropped the lawsuit.
“This was a new experience for us, but we knew it was extortion,” David Lepejian stated earlier this week. Lepejian is a co-founder and the CEO of CarShield. “We learned that the business model for these non-practicing entities is built on the practice of approaching companies to extort money with no intention of going to court.”
Without the help of free services like the BLIP Clinic, many companies can’t afford to fight back and are forced to make difficult decisions or even close their doors. It is a model the Application Developers Alliance plans to continue and hopes to expand.
“Through this important service we are able to help small companies fight back against patent trolls and avoid costly litigation,” said Apps Alliance President Jon Potter. “We are committed to helping innovators succeed, this program is one way we can do that.”
To learn more about the Patent Troll Defense Network visit: http://www.appdevelopersalliance.org/trolldefensenetwork/