A Cautionary Tale: One Troll’s Eight-Year Campaign Against 140+ Companies
Patent trolls are formulaic. They organize their campaigns around a single patent or group of patents that involve similar technologies, allowing them to target any number of companies that rely on that patented technology. In 2015, patent trolls added more than 4,100 defendants representing a variety of sectors to their campaigns. And right now, more than 1,300 active patent troll campaigns are ongoing.
Phoenix Licensing has been executing a textbook campaign for more than eight years now. Phoenix first launched its attack in August 2007 when it sued banks and insurance companies with several direct marketing patents it owns that cover customized email communications. Then, in 2013, Phoenix broadened the scope of its litigation campaign, by not only suing additional banks and insurers, but also wireless communications companies, airlines, hotel chains, retailers, and cable providers, proving that any company that employs this kind of technology could be at risk.
Phoenix built this well-conceived and -constructed campaign based on its portfolio of 11 patents. In order to create the strongest case to drive the best possible settlement—the only goal of any patent troll campaign—Phoenix decides to sue each defendant using multiple patents from its portfolio, often as many as six or seven.
Phoenix’s patent portfolio has proven to be credible, with three patents having survived challenges to their validity. Since the patents are not susceptible to an inter partes review—a proceeding used to shortcut litigation by proving the patent is invalid—the only way out of the litigation for most companies is to struggle through it, and ultimately settle. Those settlements range from the mid-six to low-seven figures.
In February 2015, RPX sublicensed rights to the Phoenix portfolio, which removed the threat of ongoing litigation for RPX clients at risk of being sued. For other companies that remain vulnerable, RPX also offers patent litigation insurance as a means of transferring the risk and diminishing the time and expense associated with any ensuing litigation.
Phoenix continues its campaign, suing 15 more companies just in February. All told, more than 140 individual companies from a diverse set of industries have fallen into Phoenix’s net since its first case in 2007.