Placeholder Banner

Patent Trolls and Nigerian Scammers

November 25, 2014
What do patent trolls and Nigerian princes have in common?

nigerian-princeTwo things come to mind. First, if you get an email from either one, nothing good can come from it. Second, hardly anybody falls for either scam.

According to the Federal Trade Commission (FTC), the most notorious patent assertion entity (otherwise known as a patent troll) has agreed to a consent decree. Which means they have agreed to halt their deceptive business practices. Of course, that’s great news, and the FTC’s crackdown on such practices should continue.

But pulling back the curtain on such operations also helps us put the issue in proper context. According to The New York Times and other news sources, this particular offender, who goes by the name Jay Mac Rust, mailed out 16,000 letters warning small to midsize companies they had violated patents that he owned. From there he attempted to shake said companies down for $1,000 to $1,200 per employee to avoid legal action.

For all of Mr. Rust’s efforts, he got exactly two small businesses to pay him and his company never took legal action against any of the other companies it contacted. Congress should keep this fact in mind the next time the large tech giants proposing sweeping patent reform use “patent troll shakedowns” of small businesses as a justification for limiting the enforceability of all patents.