Patent trolls are arguably one of the greatest loopholes of the patent system. Otherwise referred to as Non Practicing Entities (NPEs), patent trolls have patents and enforce patent rights, but they do not innovate. Instead of acquiring patents to protect innovations, patent trolls acquire patent rights for the sake of having these rights and the prospect of profiting off of them. Upon gathering patent rights, patent trolls enforce these rights by suing various companies on the grounds of infringement. These cases, or even the threat of these cases, provide patent trolls with revenue.

The company VirnetX is an example of a patent troll. With over 80 internet security patents, VirnetX has acquired many patent rights over the years and enforced these rights by the means of targeting many companies with lawsuits. Notably, VirnetX has been involved with lawsuits against Apple, Cisco, and Microsoft. Recently, VirnetX has sued Apple in regards to patents that Apple's FaceTime and iMessage technology have violated. The court ordered that Apple pay a fine of $625 million, more than VirnetX's requested $532 million.

Given the size and power of tech giants like Apple, the detriment that this lawsuit will have on Apple as an innovator is questionable at best. However, patent trolls may also target smaller companies. In such scenarios, small companies may be discouraged from even pursuing a lawsuit due to limited funds. As a result, small companies are likely to settle for what trolls request. That said, it is arguable that patent trolls significantly deter innovation that occurs at the level of start-ups and small companies.

Patent trolls illuminate the imperfection that is the patent system. Though there has been patent reform enacted in recent years, such reform has not necessarily addressed the issue of patent trolls. In my next post, I will delve further into the VirnetX v. Apple case and explore policy suggestions that attempt to remediate the issue of patent trolls.