13 ms·

Doesn't it cost a lot in legal fee to the troll too? How are they able to finance it given that they are basically a sham company?

Someone1234 1y ago
The troll is lawyers, so it only costs their own time.
- mmooss 1y ago
  Their time is worth more than the $25K they want.
ziddoap 1y ago
It's like spam. Send out 1,000s of dubious demand letters which don't cost much. Some percent of those will settle with minimal effort on the troll's side. Profit. Drop the ones that look expensive and hope they don't counter sue.
- HeatrayEnjoyer 1y ago
  What would they counter sue for?
  - ziddoap 1y ago
    I probably should have just written "counter" or "fight back". I was rushing out the office door when I pushed the reply button. In some countries you can sue for "unjustifiable threats to begin patent infringement proceedings", but I was also thinking things like filing complaints with the relevant Bar associations. That sort of thing.
conartist6 1y ago
Because they don't expect to win the lawsuit. Their odds of winning a lawsuit aren't that good, so their goal is to badger a founder into settling. A founder would likely be killing their creative endeavor to become their own lawyer and go to court for themselves, and the trolls choose targets for whom paying a lawyer for the length of one of these trials would be prohibitively costly. In other words, their real business model, the reason that they can be considered a "safe investment" is that they operate as an extortion racket at scale with the justice system itself as their (free) muscle.
- whatshisface 1y ago
  How's this? 1. You buy "litigation insurance." 2. You state that you are insured on your website. 3. The insurance company is required to defend in all patent cases that arise, so there is no doubt that you will be represented in court. 4. Nobody sues. 5. The insurance company makes a profit with no cost or risk.
  - celestialcheese 1y ago
    Is this a real thing for small companies? I have no experience with this, and the only time I've gone and tried to get quoted for things like cyber liability, etc, the costs are incredible relative to the value of the business and revenues.
  - daemonologist 1y ago
    You can buy IP insurance; the problem is that the proposed strategy only works against patent trolls. If you infringed a legitimate patent the insurer would be screwed, so they'd want to do an enormous (impossible?) amount of due diligence before writing the policy. As with most other insurance policies, insurers in practice are only willing to take on a portion of the risk.
    - piker 1y ago
      Adverse selection would be a big issue, but actually perhaps if the indemnity only covers defense, an insurer would be willing to take more risk (and have expertise in batting away these claims.)
    - therein 1y ago
      Couldn't some innovative insurance company create a policy that adds a clause like "policy kicks in if the litigant fits the criteria of a patent troll (as described above, lacking any assets besides the patent or a few patents that don't pass initial muster as legitimate, or has fewer than two physical locations with at least 4 non executive employees). Even saying something like "if the litigant has no health insurance for their employees" would actually easily preclude patent trolls as you'd have to be an actual decently sized company to be able to negotiate real health insurance for your employees.

Someone1234 1y ago

The troll is lawyers, so it only costs their own time.

mmooss 1y ago
Their time is worth more than the $25K they want.

ziddoap 1y ago

It's like spam. Send out 1,000s of dubious demand letters which don't cost much. Some percent of those will settle with minimal effort on the troll's side. Profit. Drop the ones that look expensive and hope they don't counter sue.

HeatrayEnjoyer 1y ago
What would they counter sue for?
- ziddoap 1y ago
  I probably should have just written "counter" or "fight back". I was rushing out the office door when I pushed the reply button. In some countries you can sue for "unjustifiable threats to begin patent infringement proceedings", but I was also thinking things like filing complaints with the relevant Bar associations. That sort of thing.

conartist6 1y ago

Because they don't expect to win the lawsuit. Their odds of winning a lawsuit aren't that good, so their goal is to badger a founder into settling. A founder would likely be killing their creative endeavor to become their own lawyer and go to court for themselves, and the trolls choose targets for whom paying a lawyer for the length of one of these trials would be prohibitively costly. In other words, their real business model, the reason that they can be considered a "safe investment" is that they operate as an extortion racket at scale with the justice system itself as their (free) muscle.

whatshisface 1y ago
How's this? 1. You buy "litigation insurance." 2. You state that you are insured on your website. 3. The insurance company is required to defend in all patent cases that arise, so there is no doubt that you will be represented in court. 4. Nobody sues. 5. The insurance company makes a profit with no cost or risk.
- celestialcheese 1y ago
  Is this a real thing for small companies? I have no experience with this, and the only time I've gone and tried to get quoted for things like cyber liability, etc, the costs are incredible relative to the value of the business and revenues.
- daemonologist 1y ago
  You can buy IP insurance; the problem is that the proposed strategy only works against patent trolls. If you infringed a legitimate patent the insurer would be screwed, so they'd want to do an enormous (impossible?) amount of due diligence before writing the policy. As with most other insurance policies, insurers in practice are only willing to take on a portion of the risk.
  - piker 1y ago
    Adverse selection would be a big issue, but actually perhaps if the indemnity only covers defense, an insurer would be willing to take more risk (and have expertise in batting away these claims.)
  - therein 1y ago
    Couldn't some innovative insurance company create a policy that adds a clause like "policy kicks in if the litigant fits the criteria of a patent troll (as described above, lacking any assets besides the patent or a few patents that don't pass initial muster as legitimate, or has fewer than two physical locations with at least 4 non executive employees). Even saying something like "if the litigant has no health insurance for their employees" would actually easily preclude patent trolls as you'd have to be an actual decently sized company to be able to negotiate real health insurance for your employees.