5 Tips for Startups Facing ‘Patent Troll’ Suits

September 19, 2012

Darren Donnelly, a partner in Fenwick’s Litigation Group, was quoted in a Law360 article titled “5 Tips for Startups Facing ‘Patent Troll’ Suits.”

The article reports that while large technology companies have long been the targets of patent suits by non-practicing entities, commonly called “patent trolls,” start-up companies and their investors are now starting to see a rise in these suits as well. According to Donnelly, this is in part because major companies have been sued so often that they have become sophisticated in dealing with the suits, which "creates an incentive to diversify your targets," said Donnelly.

"The conventional wisdom of trolls was not to involve startups five years ago," he said. "That's no longer the case."

One strategy Donnelly outlines is for start-ups to join forces with other defendants. In Silicon Valley, many entrepreneurs and investors have experience in patent litigation, so they are more willing to make a sober economic assessment of the business risks and potential exposure of a patent suit, he said.

As a result, they may be inclined to join with possible rivals in an effort to defeat a non-practicing entity that has targeted all of them. "It's the idea of the enemy of my enemy is my friend," he said. "Even if startups are competing neck and neck in the market, they often make peace in order to mount a joint defense."

At some level, though, there's not much startups can do, since non-practicing entity suits are becoming a fact of life, Donnelly said. "It's difficult to avoid if your plan is to become a successful company," he said. "You're going get a certain number of troll suits no matter what."