By R. David Donoghue of Holland & Knight LLP
Patent trolls -- or non-practicing entities, if you prefer -- have been the scourge of technology-based industries for years, but the problem has grown significantly of late and continues to grow. Today, troll suits account for more than half of all district court litigation, and they now target virtually every industry segment (e.g. telecom, e-commerce, and medical devices). One way that a company knows that it is becoming successful or is recognized as a player in their industry is by receiving its first patent infringement demand letter from a patent troll.
The key problem with patent troll litigation is the cost of litigation weighed against the patent trolls cost of defense settlement demand. Defending a patent suit through trial can break the bank, starting at $1M and more likely between $1.75M and $2.5M, in attorney's fees alone. While there is limited cost difference in defending against a competitor rather than a patent troll, the defendant in a patent troll case has little or no opportunity to use competitive pressure or counterclaims (other than "me too" declaratory judgment claims focused on the asserted patents) to defend itself and create exposure for the plaintiff, like one might do in a competitor case .
Without legitimate counterclaims to create business pressure on the troll, there used to be very little a defendant could do but fight the infringement claim or pay the cost-of-litigation settlement...
