LC-23 · Corporate

Patent assertion entities

A letter, then a settlement

In ordinary words

A company that makes nothing can own a patent and demand license fees from businesses that do, pricing the demand just below the cost of a court fight.

Why people call it a crime

People call them patent trolls. Owning a patent and enforcing it is the right the statute grants.

A scene, not a hypothetical statute

A small shop gets a letter: $40,000 to license a vague software patent, or see you in the Eastern District of Texas. The shop pays. No product was copied in any ordinary sense. The letter can still be lawful.

Where it stops being legal

Asserting a patent known to be invalid, sending bad-faith letters banned by a state statute, or sham litigation that is a cover for antitrust violations can create liability.

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