Pirating Your Patents

Whether they are greedy parasites or legitimate patent holders, so-called "patent trolls" take time, resources, and money from the companies they sue.

July 2006 | by Dan Heilman

Illustration by Christoph Hitz

Hitting Close to Home

Minnesota has seen its share of patent-troll cases. One of the most conspicuous happened last year, when Chicago-based Solaia Technologies, which licenses technology patents, sued Ecolab, General Mills, H.B. Fuller, Valspar, Hormel, Toro, Imation, and Donald- son Company.

Solaia claimed ownership of a patent for an automated manufacturing system used by those companies. This was the first claim of infringement on that patent, even though the companies had been using it for more than a decade. Rather than pay Solaia to make the matter go away, the companies sued.

“[Solaia] wanted $600,000 per company to avoid a suit,” says Ecolab Chief Patent Counsel Andrew Sorensen. “A typical patent trial will cost [a defendant] in excess of $2 million. . . . The question became, do you want to pay $2 million, or pay a quarter of that to make it go away? We chose to fight it, and ended up not having to pay [Solaia] anything.

“One of the reasons we fought back is, you’d like to send a message that you won’t just cave in, even if it might be easier to pay them,” Sorensen continues. “You don’t want that reputation.”

Inventor Beware

Even if the letter of the law holds that patent trolls have every right to protect what’s legally theirs, many attorneys believe the practice is nothing more than a get-rich-quick scheme.

“In my view, it is kind of like the personal-injury game come to patents,” says Jonathan Singer, a principal with law firm Fish & Richardson in Minneapolis. “The possibility of a windfall recovery has been too hard to resist for many people and their lawyers.”

“We see these demand letters from small intellectual property holding companies many times each year,” adds Kevin Conneely, shareholder with Minneapolis law firm Leonard, Street and Deinard. “We are also seeing more public exposure, and even advertising, from the IP holding companies themselves. Ocean Tomo, a Chicago-based firm, bills itself as an IP merchant bank, and recently sponsored a live patent auction, a la Sotheby’s.”