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Calling Someone a 'Patent Troll' Isn't Defamation

By Christopher Coble, Esq. on August 26, 2019

Most people have a general idea of what a patent troll is: Instead of creating new products or ideas, patent trolls often buy up others' patents and use litigation (threatened and real) to weaponize the patents and intimidate companies into licensing fees or settlements. While that sounds fairly specific, there's no definition exact enough to give rise to a claim of defamation.

"We conclude that the challenged statement, that [the plaintiff] is a well-known patent troll, is one of opinion rather than fact," ruled the New Hampshire Supreme Court, tossing out a lawsuit from the self-proclaimed inventor of the ATM.

Automated Trolling Machine

David Barcelou was a successful inventor in the 1970s and 1980s who created an "Automated Tournament Machine" in 1994 that would accept an entry fee, conduct any "game of skill," choose a winner, and then award the winner an immediate cash prize. Barcelou got a patent for his "automated teller machine" in 2005, and he and his company, Automated Transactions, LLC (ATL), began suing 7-Elevens and other chains that carried ATMs, racking up millions in settlements and licensing fees without ever operating an ATM of their own.

Naturally, the banking industry didn't take too kindly to ATL's tactics. In particular, Barcelou claims that a September 2013 presentation on behalf of the Credit Union National Association (CUNA) "include[d] a derogatory picture of a troll" and "referred to ATL as a 'well-known patent troll.'" Additionally, members of the American Bankers' Association (ABA) testified in Congress in 2013 and 2014, twice describing ATL as "patent trolls." Barcelou and ATL sued CUNA, ABA, and others, claiming that such statements were libelous.

Widely Accepted Defamation

One of the elements of a libel claim is that the statement at issue is false. Therefore, a defense to any defamation claim is that the statement is true. And this is where Barcelou and ATL's claims failed, according to the New Hampshire Supreme Court:

The plaintiffs' amended complaint alleges that many of the defendants' statements are defamatory because they refer to ATL as a "patent troll." Generally speaking, "patent troll" is a derogatory phrase used to describe "a class of patent owners who do not provide end products or services themselves, but who do demand royalties as a price for authorizing the work of others." Use of the phrase has proliferated in recent years as "[a]n industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees." Despite this uptick in use, "a widely accepted definition of a patent troll has yet to be devised."

And without a definition that everyone can agree on, there's no telling whether they are true or false. Therefore, such assertions are "mere rhetorical hyperbole," no reasonable listener would've taken them literally, and so, they can't sustain a libel lawsuit. Good news for the banks, and bad news for the reputations of patent trolls everywhere.

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