David Anderson, president of Skillbuilders, first became acquainted with so-called “patent trolls” in 2011. The 19-year-old software company based in South Kingstown has an international client roster.
“There’s an ongoing case being handled by Oracle Corp. because we’re an official Oracle partner and it has to do with an Oracle software product,” said Anderson.
His firm is hardly alone in Rhode Island in dealing with such companies that acquire a patent, often on a widely used technology, then threaten or sue many businesses for patent infringement.
“We are aware of 15 companies in Rhode Island that have been affected – who have had lawsuits filed against them – by patent trolls,” said Kathie Shields, executive director of the Tech Collective, Rhode Island’s technology-industry association. “Some have settled and some are in litigation.
“Patent trolls go out and patent open-source tools and once they have the patents, they go file lawsuits against big and small companies,” said Shields.
“One example is if you go to a retail online site and put in a zip code to find the closest store, the zip code search tool is an open-source plug in,” said Shields. “The open-source information is the coding.”
Patent trolls have been around for about 10 years, but the frequency of their lawsuits has been escalating, said Shields.
These shell companies have found states where laws make it easier for them to exist, such as Delaware or Texas, so they establish entities there, then sue companies across the U.S., said Shields.
“The biggest imposition is on small companies. They don’t have the money to fight or to settle,” said Shields. “With small companies, it’s a threat to the sustainability of their business.”
The challenge for large companies is whether to spend large amounts of money and possibly years involved in litigation fighting the lawsuit by the patent troll, or to settle, said Shields.
“Those who settle end up funding the litigation by patent trolls,” said senior counsel and patent attorney John L. Capone with Duffy & Sweeney in Providence. “Patent trolls acquire patents simply for the purpose of suing. They are not the inventors … they are simply the owners of the technology.”