The past decade has seen a growing trend of companies in California and elsewhere buying up patents that were sitting on the shelf because they were not worth commercializing. In some cases, companies purchased such patents en masse for the sole purpose of litigating patent infringement cases against businesses that produced goods or services resembling a feature in one of the patents. In many cases, the lawsuits were directed at tech companies who began to buy up such patents themselves as defense mechanisms.
Acquiring these so-called troll patents has proven to be a gold mine for many of the patent purchasers. However, the frivolous patent lawsuits are erasing as much as $60 billion in firm wealth each year, according to a study by Harvard Business Review. The Obama Administration attempted to fix the problem by working with Congress to pass legislation aimed at reducing such patent lawsuits. However, the patent trolls simply changed their business model to go after trade secrets.
In one instance, a title insurance company sued a data analytics firm for breach of contract, claiming that the data analytics firm did not deliver an advanced home valuation model that it had promised. In what appeared to be a strictly tactical move, the data analytics firm countersued and secured a jury award of almost $750 million. This is in spite of the fact that several employees later said the data being delivered to the title insurance company was of little value.
In many cases, intellectual property is the most valuable asset the business owns. However, intellectual property law is quite complex, and most business owners might benefit by securing the services of a law firm with experience in intellectual property rights.