Start-Ups Are Becoming More Frequent Targets of Patent Trolls


The recent Apple vs. Samsung patent case highlighted a topic many technology companies deal with now more often than in the past: patent infringement litigation. While it's no surprise that large and small companies were often targeted in patent cases, smaller start-up companies are now being targeted more than they used to be. Patent Attorney Martin LeFevour of Valorem Law Group discusses why non-practicing entities, or NPEs, are increasing their attacks against start-up companies.

"In the past, NPE's (sometimes referred to as patent trolls) attacks ran the gamut, but primarily focused on large companies with significant financial resources. However, as the NPE business model matures, NPEs are continually forced to look for new revenue streams," says LeFevour. "As such, we've recently seen an increase in patent attacks against start-ups who may not be as established as large companies, but have managed to raise significant funds and have grown quickly, generating a considerable amount of revenue."

For many start-up companies faced with a patent infringement claim, they feel the easiest and quickest option is to settle. "The ultimate settlements made by these start-ups with NPEs can be steep and can cost anywhere from $100,000 to $750,000," continues LeFevour. "However, many start-ups, when weighing the cost/benefit of fighting the patent in litigation, which can cost upwards of $2 million and take several years with the threat of a possible injunction, versus using that time and money towards growing the company and developing a competitive product, opt to pay the licensing fee quickly."

While paying up right away might seem like the best option for some companies, LeFevour cautions against making this decision too rashly. "While a start-up may ultimately decide it is best to settle with the NPE, it shouldn't do so right out of the box. It makes sense to at least study the patent and determine where there are pressure points that can be hit relatively quickly and cheaply. By fighting the NPE initially, it gives the start-up some negotiating leverage if the start-up can achieve some early successes and also has a potential deterrent effect by sending the message to the NPE industry that the company is not just going to roll-over and settle when faced with an empty threat of infringement. The company is telling the NPE industry that they are going have to make a solid showing of how the company is allegedly infringing if the NPE wants the start-up to entertain any serious discussions of settlement," states LeFevour.

About Valorem Law Group
Valorem Law Group is a Chicago-based business litigation firm that believes clients are entitled to budget certainty, and to a real and realized commitment in dealing with cost pressures. Valorem is comprised of skilled, courtroom BigLaw firm refugees who consider themselves revolutionaries, risk-takers and entrepreneurs at their core. The group uses technology and efficiency to guarantee value-conscious legal service. Although they may not always take themselves too seriously, the quality of the work they provide clients remains a top priority. For more information visit www.valoremlaw.com. Find them on Facebook at "Valorem Law Group."