The term “patent troll” is controversial to say the least. Some would say that its mere existence is an attempt at propaganda meant to belittle patent holders. The terms “non-practicing entity” (NPE) and “patent assertion entity” (PAE) take more of a neutral stance, but the incendiary term “troll,” with its warty, ugly connotation, has taken hold in the public consciousness.
And the U.S. government has certainly taken note of the public’s distaste for companies that bring patent suits that are deemed as “troll-like” (or, in some cases, gangster-like). But the federal government tends to move slowly when it comes to intellectual property law, and its unclear whether they will take action to stem the rising tide of patent lawsuits. If the government wishes to put a nail in the coffin of patent trolls, it needs look no further than the European Union, which is adopting a tenant of the British legal system to make truly troll-like suits economically unsound.
The European Union recently unveiled a new system to get all member nation courts on the same page when it comes to patent cases. There are some provisions of the system that worry tech firms, such as the division of patent validity and patent violation cases into separate hearings as well as the possibility of injunctions to prevent the sale of infringing products. It remains to be seen how these provisions will shake out.
The most important aspect of the system involves adopting the British standard for allocating legal costs. In the U.S., NPEs that merely exist to make a quick buck often bring small suits (a few thousand dollars each) against many different companies, confident that those businesses will settle the cases rather than pay large legal fees to fight them. In the UK, however, the losing entity in a case like this must pay the legal costs of all parties involved. This means that, if the suit is dropped or if the PAE is brought to court and loses, it must pay the legal bills of the company it sued. This would be a hefty deterrent against so-called frivolous suits, and it would be wise for the U.S. government to consider implementing a similar system.
Of course, patent holders should have the right to defend their intellectual property, but there are certainly businesses that abuse the existing system. This British method of assigning costs would certainly make patent trolls think twice about bringing frivolous suits while still allowing legitimate cases to proceed. It may just be th