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New Jersey businesses — beware of patent trolls

When New Jersey companies have a patent on a particular item or process, that patent protects them from others using the patented item without their consent. Therefore, only the company that owns the patent can make money from it. However, sometimes this doesn’t stop others from using the patented product. In these cases, a patent infringement suit is necessary in order to enforce the patent.

Recently, companies called nonpracticing entities, and known as patent trolls, have been claiming that other businesses have been infringing on their patents. These companies often send letters to the businesses with settlement offers that can keep the parties out of court. These patent trolls often don’t actually make or sell anything, but they buy licenses to use certain technology. Then, they threaten to sue other companies that have even remotely similar systems. According to the Government Accountability Office, patent trolls are responsible for an increase in software related patent infringement cases. Specifically, the GAO found that patent trolls are responsible for bringing one in five new patent infringement cases.

Often, businesses will settle with these patent trolls to avoid the expenses of a patent infringement suit. Studies have shown that these patent trolls have cost the economy $29 billion in 2011 alone. However, it is possible for New Jersey companies to beat these bullies. Recently, a case between a New Jersey luggage company and a patent troll was dismissed after the company refused to accept a patent infringement settlement offer. Instead of settling, the company countersued against the patent troll for filing a frivolous suit and won.

New Jersey businesses who are accused of patent infringement should make sure they understand their rights before agreeing to any settlements. They may be the victim of a patent troll and may be able to fight the case.

Source: The Star-Ledger, “New Jersey firm stands up to patent trolls,” Tom De Poto, Sept. 6, 2013

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