After battling patent trolls for years, Shopify has announced plans to fight back by seeking to uncover the identity of people and organizations funding patent trolls suing Shopify.
The Ottawa e-commerce giant initiated these efforts with a June 7 motion in the United States (US) District Court for the Western District of Texas. The motion calls on the Court to compel the disclosure of third-party interests in a patent troll case against Shopify, filed by Lower48 IP LLC. Shopify shared the news in a LinkedIn post from the firm’s general counsel, Jess Hertz.
“Litigants and judges need—and deserve—to know who they’re litigating against.”
– Jess Hertz, Shopify
Patent trolls are often shell companies that purchase portfolios of broad, unused patents. They then use these patents to sue others for patent infringement, demanding damages or license payments. In the US, hundreds of patent infringement lawsuits are filed against businesses every year, many by patent trolls, and most are settled with a quick payout.
“Patent trolls stifle that innovation, burying hard-working entrepreneurs in piles of legal paperwork,” wrote Hertz. “They quietly orchestrate hundreds of patent litigation cases every year, with no accountability. In many cases, we don’t know who’s funding these lawsuits. We are no longer willing to accept this as the status quo. Litigants and judges need—and deserve—to know who they’re litigating against.”
Hertz emphasized that the stakes of patent troll lawsuits can be high for many tech firms, noting that they often target small businesses and startups that can’t afford to fight or lose a legal battle.
“In many cases, we don’t know who’s funding these lawsuits,” wrote Hertz. “We are no longer willing to accept this as the status quo. Litigants and judges need—and deserve—to know who they’re litigating against.”
Hertz noted that while the identity of patent trolls themsleves is usually known, their financial backers are typically undisclosed.
“We often know who is behind patent trolls—US Innovation Fund, IP Edge, and Acacia Research,” she wrote. “But these groups’ funders, interests, and decision-makers hide cowardly in the shadows.”
Shopify has battled patent trolls for some time now. The company’s foes have included Express Mobile. In late 2022, a US court found Shopify infringed upon patents held by Express Mobile, ordering the firm to pay $40 million USD in damages. At the time, Shopify announced its intention to contest this verdict. The status of these efforts remains unclear.
While Shopify has traditionally not bothered patenting its intellectual property, in recent years, the company’s strategy on this front has appeared to shift as the company has sought to protect itself against competition and patent infringement lawsuits.
Speaking to Shopify’s efforts to uncover the identity of patent troll financiers, Hertz highlighted that there has already been some judicial precedent and force behind this issue. She pointed to a 2022 order from US District Judge Colm Connolly regarding a case with Nimitz Technologies LLC, which called out the “lack of transparency” in patent litigation cases.
“By removing the cloak of secrecy in Delaware courts, [Connolly] is encouraging other jurisdictions to take a hard look at the lack of transparency in patent litigation cases across the judicial system,” wrote Hertz.
As far as Shopify’s latest efforts to defend itself against patent trolls, Hertz wrote that “this is just the beginning,” adding that the company intends to continue to support legislation to expose patent trolls and organizations that shed light on this issue.