Small businesses face threat of litigation from patent trolls


As many New Jersey business owners know, it's hard enough getting a new business up and running, much less continue to maintain a profitable venture. There are so many expenses to consider and regulations to follow. There's now a growing trend among small mom-and-pop businesses. Many face the threat of litigation from companies they have never even heard of - known as "patent trolls."

In 2012, hundreds of small businesses received letters from about 40 companies from a patent assertion entity called MPHJ Technology LLC. This company offers no services or goods but instead works to enforce the patent rights of businesses.

So why are businesses being sued? They are apparently in trouble for using everyday technology. MPHJ acquired the patent rights to scanners that use the scan and email function - a function found on many copiers and scanners in business environments today. What's frustrating is that business owners are being asked to pay for this technology again in the form of licensing royalties - to the tune of $1,000 per worker.

The threat of litigation instills fear in small companies and these patent trolls know it. That's why they target these companies instead of the equipment manufacturers. Most business owners cave in and pay the royalties because they are much cheaper than paying $650,000 to fight the claim.

Although litigation costs can be a deterrent, it somehow doesn't seem fair that when a business owner uses the functions of a copier and scanner they should still be subject to patent infringement fees. The owner is simply using the product they bought, technology and all.. If someone tries to manipulate a small business owner and prevent him or her from making a living, it may be helpful to speak with a litigation attorney and review the available options.

Source: Washington Examiner, " Patent litigation surge against small businesses shows need for reform," Isaac Gorodetski, Aug. 9, 2013