Beware the Patent Troll: Patent Risk in the Advertising Space

April 4, 2014

by Marc Kaufman, Reed Smith LLP

Patents are intended to protect innovation by providing the patent owner with a right to exclude others from using the innovation, for a limited time, in exchange for disclosing the full details of that innovation to the public. The patent also prevents competitors from copying the owner’s innovations and claiming it as their own. Recently, new business models have created open markets for buying, selling, and monetizing patents, and as a result, various players are buying patents as an investment (see “The
Players,” page 3).

Patent assertion entities (PAEs), aka patent trolls, have been increasingly in the news by claiming ownership of many common advertising practices. Accordingly, marketers could be faced with a demand to pay large fees to a PAE that has not provided any direct services or technology to the marketer’s advertising campaign, or, in many cases, contributed to any innovation.

Patent assertion entities are also likely to be stifling creativity and innovation in the advertising community. Some agencies may be apprehensive about bringing certain new and potentially breakthrough ideas to clients for fear that this could subject them to a patent infringement assertion. The uncertainty in the advertising space is acute because many patents asserted by PAEs are directed at common Internet protocols and methods used for exchanging information in advertising campaigns, including web-based, mobile, and real-time advertising. An issued patent is presumed valid, and challenging a U.S. patent in court can cost several million dollars. Adding further complication is that unlike trademark use, obtaining reasonable upfront certainty that an ad campaign does not violate a patent is often not practical.

(Please see our "Also See" section to the right for the full PDF of this report.)


"Beware the Patent Troll: Patent Risk in the Advertising Space." ANA Thought Leadership, 2014.