Fighting Back Against Patent Trolls

It happens every day: a small business owner gets a letter from a company claiming that some common business practice or simple product violates its patent and demanding thousands of dollars in “license fees. But one small business owner is fighting back against patent trolls

The Lawsuit

The Electronic Frontier Foundation (EFF) has filed a lawsuit in Florida on behalf of small business owner Jason Cugle against well-known patent troll,Shipping & Transit LLC.

Shipping & Transit sends out letters accusing businesses of patent infringement and demanding thousands of dollars to license the patents or settle the matter. It then routinely sues those who don’t pay up in hundreds of lawsuits asserting frivolous patent infringement claims as part of its business model.

Cugle runs a small business selling accessories for electronic cigarettes. He sends customer shipments through the U.S. Postal Service and manually emails each customer a shipping notice with a USPS tracking number. He received a letter from Shipping & Transit accusing his company of violating its patents covering methods for notifying customers of shipment status.

However, as noted in the complaint, three of the four patents asserted against Cugle expired two years before he started his mail order business, and the patents may not be valid in the first place.

Among other intimidation tactics, Shipping & Transit implied that a litigation was pending against Cugle, though no complaint was filed, and tried to force Cugle into signing an affidavit of non-use as well as demanding a license fee of $25,000 for a license to use its patents.

Cugle seeks more than $50,000 in damages against Shipping & Transit for bad faith enforcement of its patents, as well as seeking to have the patents invalidated by the court.

What to Do If It Happens to You

All business owners are susceptible to patent-related legal action. Not all business owners can count on the EFF to come to their aid. But there are some things you can do to protect yourself against a patent infringement lawsuit, according to

  • Be proactive. Before you put any product or service on the market, do a thorough search to determine whether or not that item has already been patented.
  • Insure. Several insurance companies now provide intellectual property insurance which protects a business in the event a lawsuit is enacted against them.
  • Ask an attorney. If you receive a demand letter or notice of suit, do not do anything until you’ve consulted with a lawyer. Do not respond directly to the sender of the letter, but honor the response deadline in the letter.

An attorney can assist you in determining whether the underlying claim is valid, whether the patent claimed even applies to your business, and may be able to shut down a patent troll altogether. If you have an idea for a new product or service, contact us for a referral to a patent attorney to make sure you are protected.

Meehle & Jay and Suzanne have been our counsel for Echo Interaction Group since the inception of our company. Her guidance has gone above and beyond the typical small tech business attorney and she's become a trusted advisor to our firm. Her knowledge of small business legal needs and specifically in the technology and startup world have been crucial to the growth of our company.

Carlos Carbonell, CEO, Echo Interaction Group

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