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Patent trolls, commonly referred to as “non-practicing entities” (NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. More) or more accurate as “patent assertion entities” (PAEs), assert patents against companies that have inadvertently incorporated patented technology into their products. Although trolls are sometimes the original inventor or applicant for the patent, they usually acquire patents through a subsequent transaction. Since trolls generally do not produce or sell anything, they are not at risk of infringing other patents, allowing them to assert patents aggressively without fear of retaliation. Often defendants, especially smaller companies and startups, will choose to settle to avoid expending time and resources on costly litigation.
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A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it.
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A narrower term for trolls that focuses on the core business model rather than whether the entity is actually making use of the patented technology (“working the patent”). As their name implies, they generate revenue from asserting their patents to obtain licensing fees, settlements or court-mandated damages.
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Privateering is a recent development in which large companies work with trolls, explicitly or implicitly, to attack their rivals. In one common form, companies license patents to allies, retain a license for themselves, and then sell the patents to trolls who can use them to attack unlicensed third-parties. Unlike the company that originally owned the patents, the trollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms. can go after that company’s rivals full force without fear of retaliation or reputational damage. A variation on privateering includes spinning patents off into shell companies that become patent assertion entities.
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The Federal CircuitSee CAFC is short for the Court of Appeals for the Federal Circuit, also abbreviated CAFCThe U.S. Court of Appeals for the Federal Circuit, commonly referred to as ‘the Federal Circuit.’ The appellate court that has exclusive jurisdiction over patent appeals from district courts as well as the USPTO. The Federal Circuit was established in 1982 to regularize patent law across the country but has often been criticized for what many perceive as an applicant/patentee. The Federal CircuitSee CAFC is a specialized appeals court that hears all appeals of federal district court decisions on patent litigation. Traditionally, when a district court case is appealed, it moves up to the regional circuit court that has appellate jurisdiction over the district court. The Federal CircuitSee CAFC was intended to make patent law more uniform, but it became a “booster of its specialty,” making patents easier to get, easier to assert, harder to invalidate, and available for abstract subject matter.
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The International Trade Commission (ITC) is an independent, quasi-judicial federal agency that has the power to block imports into the United States for “unfair trade practices,” including patent infringement. Through the ITCInternational Trade Commission, it is possible to get an exclusion orderAn order issued by the U.S. ITC as a result of a 337 action, excluding from entry into the United States goods found to infringe a U.S. patent. as a result of a 337 action, which permits patent owners to exclude from entry into the United States goods found to infringe a U.S. patent. Following the Supreme Court’s 2006 eBay decision, which made injunctions–particularly for non-producing entities–more difficult to obtain in patent infringement cases before the federal courts, the ITC has seen a marked increase in patent infringement complaints. With an average case length between 12 and 15 months, ITCInternational Trade Commission cases are usually resolved more quickly than district court cases, but the ITCInternational Trade Commission cannot award damages. Once the Administrative Law Judge (ALJ) rules on a case, following a recommendation by ITCInternational Trade Commission staff, the ITC’s six commissioners vote on whether to uphold or reverse the ALJ’s decision. Following the ITCInternational Trade Commission decision, the president has 60 days to override the ITC’s order. If the president does not act within 60 days, the ITC’s import ban takes effect.
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UtilityAn invention must useful to be patentable. Very few inventions are invalidated as lacking utility. Perpetual motion machines, for example, are typically found invalid for lacking utility. patents may be granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof. Business method and software patents are utilityAn invention must useful to be patentable. Very few inventions are invalidated as lacking utility. Perpetual motion machines, for example, are typically found invalid for lacking utility. patents.
Design patents may be granted to anyone who invents a new, original, and ornamental design for an article of manufacture. Design patents do not overlap with utilityAn invention must useful to be patentable. Very few inventions are invalidated as lacking utility. Perpetual motion machines, for example, are typically found invalid for lacking utility. patents; they are expressly limited from applying to any functional characteristic or attribute. A design patentAs distinct from a utility patent. A design patent protects only the ornamental design or appearance of an article of manufacture, but not its structural or functional features. An ‘article of manufacture’ is a broad term which may extend even to computer icons. Like utility patents, design patents must be nonobvious but this standard is harder to apply to designs. may only protect ornamental, non-functional qualities. Smartphones may be covered by design patents in addition to utilityAn invention must useful to be patentable. Very few inventions are invalidated as lacking utility. Perpetual motion machines, for example, are typically found invalid for lacking utility. patents.
Plant patents may be granted to anyone who invents or discovers and asexually reproduces any distinct and new variety of plant.