They prey on the weak. They lurk in the shadows and strike when you least expect it. These “trolls” are not the cute, cuddly ones of our childhood (although if you are like me, you thought they were a little creepy). They are real, and they are intent on taking your money.
A patent troll is a company or individual who owns or purchases a patent to charge other companies for infringing on their patent, making profit through settlements. Where patents were originally designed to prevent theft of intellectual property, it seems they’ve become a money-making weapon. How it works is simple: the patent troll purchases a patent, which is often vague and broadly worded – let’s say it’s for an ATM. They then contact several financial institutions and allege that they are violating the patent it holds on their ATMs, and threaten legal action. Their targets are generally smaller financial institutions that may not have the money or legal tools necessary to fight these allegations, and rather than take the case to court for a long, expensive fight, many institutions often choose to settle, which can bring in tens of thousands of dollars per case for the trolls.
So what is being done to stop these evil little trolls? Due to heightened awareness of patent troll activity, several organizations are stepping up to take action. Last month at the GAC, CUNA Mutual announced its new Enhanced Defense Reimbursement coverage to help credit unions against rising litigation costs. Even President Obama has taken notice, calling for patent reform legislation in his recent State of the Union address – currently there are at least twelve pending bills dealing with some aspect of the patent troll issue. While these are steps in the right direction, there is still much to be done. In the meantime, if your credit union is targeted, don’t be afraid (trolls can smell fear!). Instead, make sure you do your due diligence, and be prepared to defend yourself.