Business Opportunities Weblog

What is Patent Trolling?

By on July 21, 2010 in Ideas

Erich Spangenberg makes a fortune by buying patents and then suing large corporations that are infringing on them. Good.is takes a look at his unusual and vilified profession:

Trolling works something like this: First a shell company, which is incorporated but has no significant assets or operations, is created. Orion IP is one of Spangenberg’s many shell companies; others of his include Plutus IP, Taurus IP, and Gemini IP, to name a few. Next, this shell company purchases a patent or a patent portfolio, typically from a failing company and sometimes from an inventor. Once the shell company has researched which operating companies are using similar technology to the patents it owns, it files lawsuits claiming patent infringement. And if you’re Spangenberg, you file lots of lawsuits.

In March of 2007, Orion IP filed suit against 46 companies—including Xerox, Williams-Sonoma, Pottery Barn, and Nordstrom—over two patents covering electronic product proposals and sales. In April of the same year, Gemini IP filed suit against six companies: Hewlett-Packard, Cisco Systems, Adobe Systems, Avid, Pinnacle, and Corel. In August, Taurus IP filed suit again Ford, Mazda, and Volvo. Spangenberg estimates that he currently owns about 65 patents and typically has eight or nine lawsuits going at any given time.

Most companies, when they’re sued by patent trolls, will settle out of court for undisclosed amounts. Others will fight back, as Hyundai recently did against a suit by Spangenberg, but the law is not often on their side. Hyundai lost to the tune of $34 million, which should give you an idea of the amount Spangenberg rakes in every year from lawsuit settlements.

patents

Business Opportunities Weblog editor and publisher Dane Carlson lives in the Sierra Nevada mountains of California, just 15 miles from Yosemite National Park. He accidentally became a professional blogger in 2001. He has added 12,203 posts to the site.

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  • http://wahm.business-opportunities.biz Angela Shupe

    I have a theory about people who make their money by being jerks… they simply don’t have what it takes to do something for themselves. Basically I think this man is abusing our court systems. He’s probably on a first name basis with judges by now. It’s pathetic. If he really wants to do something then maybe he should use his brain and come up with something of his own that he can make a good living off of.

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