High Court hands down a club to beat patent trolls with

29 July, 2015

Businesses who receive threats from patent trolls now have another weapon in their arsenal, as the High Court has made an admittedly unprecedented ruling concerning disclosure requirements.

 

Patent trolls generally operate by acquiring patents and then asserting their rights with broad and often vague claims that other similar technologies infringe their rights. Through pursuing or threatening legal action against organisations which they allege use their patented technology, they can pressure those organisations into taking up licences or making one-off payments.

 

In this case, the Big Bus Company Limited (B) received notice from a patent troll (T) that its online ticketing system infringed the patent which T held, and that B needed to agree a licence. B denied infringement, and challenged the patent’s validity. T maintained that the patent was valid, and infringed, and that many other similar companies had taken out licences.

 

Wanting confirmation that this was true, and a guide for the potential cost of such a licence, B requested disclosure of all the licences and the names of the licencees, which T (unsurprisingly) refused. B followed up with an application to court for pre-action disclosure (i.e. before T had tried to sue B for infringement).

 

The court, in a novel decision, allowed the application in respect of licences in the transport sector.

 

Patent trolls generally wish to individually negotiate with potential licensees, without them knowing what other licensees have paid, in order to maximise their profits. This judgment allows recipients of patent troll threats to use the civil procedure rules to require disclosure of certain relevant documents to allow them to negotiate on an equal footing. More generally, it typifies the modern approach to pre-action conduct and disclosure in that early exchanges of information should be used to avoid lengthy and costly litigation.

 

If you receive a threat of patent infringement, or a request to take out a licence, the best course of action may not be immediately clear. Different patent trolls have different appetites for litigation. Your legal team may be able to advise you as to the validity or seriousness of the claim, or refer you on to specialists who can.