Slaying the Troll: Litigation as an Effective Strategy Against Patent Threats

Abstract

Litigation has traditionally been seen as a disfavored option for an accused infringer. Instead, litigation is commonly viewed as an activity that is forced on an unwilling market participant. This article proposes that the threat of litigation is a double-edged sword that affects not just the decision making process of the infringer, but also that of the patentee. The threat of litigation is particularly important when the patentee is a patent troll, counterbalancing the patent troll's ability to force a license and playing a key role in forcing low- or zero-cost settlements. This article first explores the options available to the accused infringer in the face of a patent threat, and defines the concept of a patent troll. It then examines the reasons why an infringer might choose to litigate, and describes a model through which to view the infringer and patentee's decisions. This model is then used to examine how changes in the ability of patentees to obtain injunctions may drive the tendency of parties to litigate and the value of settlements that occur in place of litigation.

Keywords: Patents, Trolls