Patent trolls produce a product, but choose not to market it commercially. Instead, they patent their design and sit on it, waiting for another product to come along that they can potentially sue for infringement.
If a judge upholds a patent infringement claim, they usually use a four-part test to determine if an injunction is needed:
Irreparable injury – Did the infringement hurt the patent owner’s commercial interests?
Inadequacy of other remedies – Could the infringer pay royalties and keep producing their product? Can the infringer change key elements to distinguish their product?
Balance of the hardships – Would an injunction put employees out of work or permanently affect the infringer’s business?
Public interest would be served – Would an injunction help eliminate market confusion?
In the past, patent trolls did not have to prove that another company’s product was hurting their commercial interests. The courts assumed that the very act of infringement was damaging to businesses, and so they were usually willing to issue an injunction.
In the past, if the “infringer” had a successful product, an injunction would halt production and cost them dearly in lost revenue, so most companies were forced to pay off patent trolls. However, a recent Supreme Court ruling may make it more difficult for patent trolls to extort businesses.
In Tiffany Inc. v. eBay, Inc., the Supreme Court rejected the presumption of irreparable injury in patent cases. Now, patent trolls have to show that the infringer has caused “irreparable damage” to their brand before the court considers an injunction.
If the court rules that an injunction is not necessary, the law allows patent owners to seek royalties for compensation. In these cases, a district court judge works to determine a fair and reasonable settlement figure but does not force the infringer to stop distributing their products.
If you are being targeted by a patent troll, you need professional legal help. Klein Trial Lawyers has been protecting California businesses for more than 20 years, so schedule an appointment to discuss your legal concerns today.
Did You Know: Intellectual Ventures, a Washington technology firm, has made about $6 billion from patent trolling.
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