Bad news for the financial services industry: Lawsuits against financial institutions by patent trolls are on the rise. A patent troll is a company that obtains patents being sold at auctions by bankrupt companies attempting to liquidate their assets, or by doing just enough research to prove it had the idea first. It then launches lawsuits against infringing companies, according to Investopedia. Most commonly, patent trolls sue for software infringements.
Large banks such as Bank of America and U.S. Bank have been targets. But patent trolls are actually more interested in targeting smaller banks ó just ask First National Bank of Omaha, Neb., or Astoria Federal Savings and Loan Association in Long Island City, N.Y. First National was sued by Intellectual Ventures for infringing on its computer-related patents. Astoria Federal was sued by Automated Transactions LLC for patent infringement involving ATM software and functionality.
Smaller banks are popular with patent trolls because they do not have the resources larger banks have to fight the lawsuits. The smaller institutions tend to settle because the patent troll is asking for less money than what litigation would cost the bank.
The good news: Smaller institutions can fight back. A group of New England banks joined together in 2012 to form a defense group to fight a patent troll, according to an article on Trinovus.
And the government is doing its part through H.R. 3309, also known as the Innovation Act, which was introduced in October by Rep. Bob Goodlatte, R-Va., chairman of the House Judiciary Committee. It targets abusive patent litigation by increasing transparency within the litigation process and requiring parties to disclose more initial information to explain why a suit is being filed. The bill also provides for education and outreach to small businesses and requires studies on abusive patent litigation.