Startups are playing a significant part in modernization and development of technology while at the same time creating jobs. However, the growth of secondary markets for patents and the multiplication of patent assertion entities (PAEs) beginning in the early 21st century has made the patent ecosystem a challenging environment for startups to navigate. Startups are not usually established by attorneys, so patent law is not typically a front-line issue for them. Though there is a greater realization about the importance of patents and patent security is now on the top 10 list of things for startups to focus on, the critical urgency on the issue is still a miss. In a recent survey1 it was found that even though gigantic organizations are dictating patent headlines, most exceptional perpetrators to troll suits are small-scale. Businesses with fewer than $100M yearly proceeds represent at least 66% of exclusive respondents to troll suits and at least 55% of distinctive respondents in troll suits make $10M per year or less. A big proportion of these respondents stated a "substantial working effect" - deferred employment, product alterations, a turn in business approach, failing down a business line or the entire business, and/or lost valuation.
Startups face challenges that their established counterparts do not. To begin with, startups must be dependent severely on outside resources of money therefore, startups choose to file for patents ahead of time in their lifecycle to present their value to prospective stakeholders. In furtherance, PAEs intimidate startups with patent violation claims at a proportionately higher rate, which disturbs startups' productivity and distracts their already constrained resources. Let us explore the "brutal patent cycle. "The cycle begins when startups apply for patents to indicate the value and, when 90% of these startups fail, they leave behind their patents disowned that then become part of the "patent web". PAE's gain ownership of these deserted patents and start using them against other startups making even more startups fail this vicious cycle then continues. A Patent Troll uses a patent as a lawful weapon instead of making new products or evolving new ideas. Patent Trolls are individuals or companies that are in the business of litigation. As patent offices across the world see a large number of patent applications, many times they do issue a patent for ideas that are not Novel or Radical. These patents have very broad applications in our day-to-day life and include common-sense ideas. Patent Trolls uses their patent titles to try to compel individuals, businesses, and non-profits to pay the fees for use of ordinary items of daily use like office equipment, printers, Wi-Fi routers, and these days a new trend of threatening Mobile Phone APP developers is also in business.
A Patent Troll Scam starts from somehow getting or buying Patent Titles and then threatening organizations that the Patent Troll argues to infringe their patent. Since these patents are related to our day-to-day life, a large number of such letters, threatening legal actions if fees are not paid are sent out. Most of the receivers of this kind of threat generally agree to pay the fees, although knowing that the patent is bogus, as the cost of Litigation is very high both in terms of money and time. Cost of litigation may range from tens of thousands to hundreds of thousand US Dollars and a lawsuit may drag on for years.
Although patent trolling is not new to the patent system but recent trends of alarmingly high incidences where small companies and developers are being targeted by trolls, is a serious concern for the stability of the entire system. Trolls are breaking apart the entire system and as a result, the system which was established to foster innovation is itself working against it.
WAYS TO TACKLE PAES
Numerous startups consider patent security as something that is "essential but not demanding." There is frequently an awareness that tackling the patent approach will be time and capital-demanding. But it is not the very truth and some ways can offer mitigations to patent trolling without investing much time and money. Startups can learn from nature and utilize the advantage of togetherness the "Herd immunity".
Herd immunity each offering its layers of protection startups can build strong protective communities. occurs when a large portion of a community (the herd) becomes immune to a disease, making the spread of disease from person to person unlikely. As a result, the whole community becomes protected — not just those who are immune. Analogous to this is that PAEs are like the disease-causing virus which is killing the startups at an alarming rate.
The mechanism here is to leverage associations. Through mutual knowledge sharing, skills, and privileges that the groups build, startups can utilize precious resources to get themselves headed for a greater position of the groundwork for comparatively minimal cost. Through a collage of these networks.
This is a resource that gives startups a substantial dispersed advantage while at the same time is very cost and time efficient. As a matter of fact, for businesses making less than $5 million per year it is free of charge. LOT effectively protects its representatives from litigation initiated by PAEs against using other associates' patents, which jointly number nearly 900,000, by granting each LOT member a license in case any of those patents fall into the hands of a patent assertion entity (PAE).
THE SMALL BUSINESS COMMERCIALIZATION PATENT
According to a Forbes report, out of the 2.1 million active US patents barely 5% get to arrive at the market. Nearly 90% of the patents fail to be commercialized. These unlicensed patents include over 50,000 high-quality patented inventions belonging to universities. Similarly, in India, no more than 5% of patents reach the market. In a viable market if you wait for too long, others will capture your niche space by launching similar products or they may copy your invention. PAEs live in a belief that they will catch a "big fish" breaching their patent and get royalty or damages at some point of time.
The Small Business Commercialization Patent is a Customized Solution for the Startup Industry. This section will discuss the "small business" limit, the "exclusivity period," and transferability of the SBCP. The aim of the SBCP is to expand innovation while avoiding misuses of the system and the creation of undesirable externalities. With the right stability of boundaries, SBCPs could be a sustainable way out.
SBCP is envisioned to incentivize startups and capitalists to commercialize new inventions under the safety of a short-term duopoly. However, with no constraints, enormous, well-established companies might take advantage of the system and eradicate its prospective advantages. Thus, it is proposed to implement a small business limit as a requirement for the grant of a SBCP.
A new report from Unified Patents, found that 449 patent cases were filed in district courts in January 2015 - a 36% increase over January 2014. The growth was fueled largely by patent trolls, who filed more than half of the month's cases. This marked the second month in a row which saw an increase in patent litigation from the same period a year ago.3
There were more cases filed by patent trolls in one month in January 2015 than in the entire year of 2004. (Trolls filed 250 cases last month as compared to 234 cases in all of 2004).
ACTIONS AGAINST PATENT TROLL
World Patent Marketing, the world's fastest-growing patent and inventor Services Company, has accelerated its campaign against patent troll scams. The company has continued its support of non-profit associations, political action committees, and political heavyweights that are committed to the destruction of the notorious patent troll scams4.
The powerful chair of the House Judiciary Committee, Rep. Bob Goodlatte introduced the Innovation Act for a second time. This bill, aimed at hurting patent trolls by making a plethora of changes in US patent law, easily passed the House of Representatives last term but was subsequently bogged down in a Democrat-controlled Senate. However, now that the GOP controls both wings of Congress, many observers predict the bill will soon become law. Other experts aren't so sure, noting that the Innovation Act is drawing some powerful opposition – and not just from patent trolls.5
1. www.cs.berkeley.edu (Last visited on 20/12/2021)
3. www.eff.org (Last visited on 20/12/2021)
4. globenewswire.com (Last visited on 20/12/2021)
5. ip-watch.org(Last visited on 20/12/2021)
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