Have patent trolls found their way to Norway?

News | 24.05.18

Intellectual Property Rights
Patents may be misused. The single purpose of some companies is to get hold of patents that shall solely be used to force other companies into licensing or to pay considerable amounts in connection with a settlement, the so called patent trolls or patent pirates.

Have patent trolls found their way to Norway?

Norwegian entities have historically been surprisingly passive with regard to patenting their innovations. The Norwegian Industrial Property Office, however, works purposefully to inform and give guidance to the Norwegian industry.  The purpose is to increase the patenting frequency. Using patents as a means to secure the ownership of new, technological inventions is desirable and required. A patent holder's exclusive right to utilise his invention is meant to be a compensation for the investments spent on the creation of the invention.

Threatening to institute legal proceedings
What is characteristic of the patent trolls is that they have no other activity but to claim and earn money on their patent rights; they are so-called "non-practicing entities" or "patent assertion entities". They have either applied for the patents themselves or made a bargain with a bankruptcy estate or with entrepreneurs that have had to succumb. Then the patent trolls approach other entities and claim patent infringement. Threats of legal proceedings in case of unwillingness to pay are quite common.

Exploiting the situation
We think that part of the problem is caused by the pressure put on the various regional and national patent offices. There is an increasing amount of patent applications, but the number of examiners at the patent offices do not increase similarly, which means less time to consider each application. The patent trolls exploit this situation. Patent applications that in reality do not qualify for approval may occasionally slip through and may be a dangerous weapon in the hands of a troll.

The patent trolls attack larger entities with a solid capability of paying, often IT companies. But also smaller entities are exposed to "trolling" when their technical success becomes known, even if the commercial success lies further ahead. The patent trolls also find possibilities of forcing companies with great potentials, but with a weak economy. This is typically promising technological start-up companies. Such companies seldom have the muscles to go through with a long-lasting legal process, but might provide sufficient capital to make a settlement and pay its way out of the mess. If the company succumbs during the process, the patent troll is ready to take over the estate's patents, if any.

Increasing problem also in Norway
In USA, the patent trolls have become an increasing problem, often involving larger sums. One example is the company SimpleAir, which is often referred to as a patent troll. The company has attacked inter alia Google, Apple, Microsoft, CBS, eBay, Amazon and Yahoo, claiming infringement with SimpleAir's "push notification" patents. All the said companies, except for Google, have entered into confidential settlement agreements with SimpleAir. Google's fight against SimpleAir is still pending in the legal system in USA.

Patent trolls have previously not been considered a problem for Norwegian entities. However, there are now popping up actors in Norway that may be characterised as patent trolls and that threaten to institute legal proceedings against Norwegian companies unless they pay a sufficient amount. We also see a tendency that when Norwegian companies commercialise their products in USA they are exposed to the patent trolls there. It is not surprising to see that the development in USA over the last decade  is now reaching our country when the trend is to incite new technology, innovation and patenting.

How to protect yourself
There is no simple recipe for how a Norwegian technology company shall act when the patent trolls arrive. A tip is to keep updated on the patents applied for in Norway within the company's own sector and technology, lodge objections  if there is any reason to protest against a third party patent application, and – as a defensive strategy – acquire or obtain license to patents that may become problematic if they fall into the hands of a party that chooses an aggressive path.

One of the most important actions, however, is that trades and entities are open about threats they receive from patent trolls. In that way it might be possible to identify the activities of the trolls at an early stage, and one may defeat them by uniting forces. That should be of mutual interest, even between competitors.

This article was first published in Finansavisen 7 May 2018.