Recent figures from America suggest that over half of patent litigation is being brought by non-manufacturing firms that acquire and exploit libraries if patents to extract licensing fees are from creators.
Known as ‘patent trolls’, these firms usually target small companies with low annual incomes and in the US had cost around $29bn to businesses in legal fees and settlements in 2011.
In fact, the government there is so concerned at the impact of patent trolls that the White House published a piece on its website earlier this year entitled “Taking on Patent Trolls to Protect American Innovation”.
However, fears that trolling could, like the weather, eventually reach the UK may prove groundless. For one thing, the patent litigation system in the UK differs from its US counterpart.
Because in the UK the loser pays a large contribution towards the winner’s costs and a troll starting a claim then discontinuing it must pay the other side’s costs, those starting or pursuing weak or nuisance patent claims may be put off.
In addition, a claimant may be required to provide security for the defendant’s costs if there is a concern that the claimant may not have funds to pay at the end of the case, which could be the case with a cash-poor entrepreneur.
Although the UK has not seen an explosion of cases brought by trolls, as has happened in the US, there have been some that have brought claims, especially in the telecoms and standards field.
Fortunately for us, for trolls looking to bring proceedings in Europe, Germany has been seen as a preferred location to start litigation, as infringement and validity are handled in separate proceedings there. It is possible to get a finding on infringement a long time before there is a decision on validity, which may place pressure on defendants to settle.