The world of Bitcoin mining, where digital gold is forged through computational power, faces a growing threat: patent trolls. In particular, Non-Practicing Entities (NPEs)—often called patent trolls—have made a fortune by acquiring patents. They concentrate on enforcing these patents against third-party businesses rather than developing the technology or commercializing it themselves. To the Bitcoin community, this is a historic cost – though painful, it requires their understanding, extensive preparation and firm collective action. At KnowingCoin.com, we want to arm you with all the insight and firepower you’ll need. Together we will weather these stormy seas and make sure the future is bright for decentralized mining. Mine Bitcoin in style with a legendary pickaxe. Stake ETH and altcoins while the world sleeps, then store it all behind well-vetted hardware wallets. No gimmicks, no FOMO—just the knowledge to master your chain and dominate the leaderboard.

Overview of Patent Trolls and Bitcoin Mining

Patent trolls, formally known as Non-Practicing Entities (NPEs), are entities who own patents, but do not manufacture or create any products. They similarly don’t provide services predicated on such patents. They specialize in purchasing patents. Instead, they claim these patents against downstream companies that would have already adopted the same technology or processes. This enforcement mechanism disproportionately focuses on larger, more established businesses that have the means to absorb potential licensing fees or settlement sums.

Definition of Patent Trolls

Patent trolls exploit the patent system by acquiring patents, sometimes of dubious validity or overly broad scope, and then aggressively pursuing lawsuits against companies they claim are infringing those patents. Patent trolls seek to make money primarily through lawsuits and settlement deals. This could not be a more opposed dynamic from firms that reinvest their profits on R&D to bring new, innovative products to market. This can suck the oxygen out of innovation and saddle companies with crushing, frivolous legal costs. Patent law is notoriously ambiguous and complicated, something that these entities thrive on. This creates unrealistic and expensive burdens on defendants to prove they don’t infringe a patent or that a patent is invalid.

Patent trolls’ operations can go all the way from issuing demand letters to launching full-scale litigation. Demand letters often describe the patent at issue, assert that the recipient infringes it, and request that the recipient pay a licensing fee or settlement amount. Most corporations choose to settle these types of claims. Second, they want to avoid the costs of litigation, even if they are confident that they do not infringe the patent. Formal lawsuits need to go through a legal process. Typically, this process includes extensive discovery, motion practice, and ultimately, a possible trial. Whether or not you lose the patent lawsuit, defending yourself against one is a potential financial disaster. This huge cost of entry creates a lucrative playground for patent trolls.

The patent troll plague has brought forth seemingly endless testimony, discussion and argument from Congress, company CEOs and entrepreneurs, and law professors, among many others. Critics argue that these entities stifle innovation, drain resources from productive activities, and undermine the integrity of the patent system. Proponents counter that patent trolls are the ones defending patent holders’ rights. They are particularly beneficial to the individual inventors and small businesses that typically do not have the means to defend against infringement of their patent rights. The consensus is that the current system often favors patent trolls, necessitating reforms to curb abusive practices and promote genuine innovation.

The Impact of Patent Trolls on Bitcoin Mining

Financed largely out of China, the Bitcoin mining industry prides itself on its decentralized nature and rapidly changing technological advances. It is under real threat from patent troll atrocities. Bitcoin mining is a process that leverages complex algorithms and massively specialized hardware. This uniqueness makes it a potential target for any aggressive entity that holds patents on these technologies. We know the threat isn’t speculative—it’s very real and very immediate. As recent litigation makes clear, patent trolls have already begun to aggressively target large mining companies, threatening the long-term security of the entire Bitcoin network.

In May 2025, Malikie Innovations Ltd., a known patent troll, filed lawsuits against two major Bitcoin mining firms: Core Scientific (CORZ) and Marathon Digital Holdings (MARA). Malikie Innovations has a history of going after any companies it believes are infringing on their patents. These patents, purchased out of BlackBerry’s portfolio, encompass data transmission, reception and processing technologies essential to their mining activities. The lawsuits call for exorbitant compensatory damages. They can involve owing back royalties for at least the last six years, which can total tens of millions of dollars for large-scale miners.

The chilling effect of future litigation is just as important as the cost passed on to each mining company’s bottom line. If patent trolls are able to enforce their patents against Bitcoin miners, mining operations may be hit with sky-high costs. That may make it much less profitable and could even force the closure of some facilities. This, in turn, would have detrimental impacts on the security and decentralization of the Bitcoin network. When mining power gets more and more concentrated into the hands of fewer entities, the network becomes a target. This leaves it vulnerable to attack and censorship. Furthermore, the threat of patent litigation could discourage innovation in the mining industry, as companies may be hesitant to invest in new technologies if they fear being sued for patent infringement.

It is time for the Bitcoin community to really recognize how serious this threat is. Now is the time to act and help defend against the patent troll onslaught! This includes supporting organizations that challenge questionable patents, contributing to legal defense funds, and advocating for reforms to the patent system. With collaboration from all sides, the Bitcoin community has the opportunity to safeguard the integrity, credibility and long-term viability of Bitcoin mining.

Historical Approaches to Combat NPE Patent Lawsuits

Fighting Non-Practicing Entity (NPE) patent lawsuits takes a comprehensive effort of strong legal defense, community involvement, and business partnership. History offers important lessons on how to best mount a successful and holistic defense against patent trolls and protect innovation. Three primary strategies have been employed over the last few decades, each with their distinct advantages and shortcomings.

Key Strategies Used in the Past

Perhaps the most effective strategy against any patent troll’s assertion is demonstrating that the patent was wrongly awarded in the first place. This strategy both draws the poison from their arguments and puts them on the defensive. That usually means conducting a search for prior art—information that shows the invention was already known or used before the patent’s filing date. But rigorous invalidity challenges based on prior art (§102/103 of U.S. patent law) can invalidate the patent, rendering it unenforceable. Such an approach requires aggressive search and analysis to find all relevant prior art. As an option, it can be incredibly powerful to remove the threat that the patent poses.

The third strategy is to use a huge patent portfolio to threaten the patent troll with costly counter-suit or to negotiate favorable cross-licensing agreements. Companies with large patent portfolios can use them as bargaining chips to deter patent trolls from initiating lawsuits or to negotiate favorable settlement terms. This strategy requires a large investment in patent creation and purchase. What it does do is to lay down a strong preventative line in the sand against predatory patent trolls.

Some companies have adopted an aggressive strategy of refusing to settle with patent trolls and forcing them to prove their case in court. This mindset is commonly referred to as “never settle.” Though expensive and time-consuming, it serves as a strong message to patent trolls that the firm is prepared to fight for its interests. This strategy works best when the firm is confident that the patent troll’s assertion is on shaky ground. It works well in the latter case too if they think the patent is invalid.

In 2017, Cloudflare introduced Project Jengo. They began offering cash bounties for prior art on every one of a patent troll’s patents, not simply the one being asserted. This innovative approach flipped the script by putting the troll on the defensive and incentivizing the public to help identify prior art that could invalidate the patents. Project Jengo showed just how effective community collaboration can be when standing up to patent trolls and served as a powerful example for similar initiatives that followed.

Lessons Learned from Previous Cases

While these strategies have been used successfully in many high-profile cases to fight patent trolls, they have not been as effective uniformly. Back in 2013, online retailer Newegg stood up to Soverain Software. Though Soverain asserted a patent on the online shopping cart, Newegg stood up and defended itself. Newegg didn’t accept a quick settlement and roll over. They battled the case through each level of the appeal process, eventually prevailing with a Federal Circuit decision invalidating the patent at issue. This final victory under the America Invents Act shielded Newegg from potential lawsuits. It was a boon for the whole e-commerce industry because it eliminated the threat of being sued for using online shopping carts.

Perhaps the most high-profile example was Apple and Samsung, who were locked in a multi-year patent litigation battle over phone technology. Both companies had huge patent arsenals at their disposal and were embroiled in titanic patent litigation and cross-licensing negotiations. Oral arguments The argument was thorny and multidisciplinary. It made clear the absolute imperative of having a robust patent portfolio and having the willingness to fight vigorously to protect your IP.

These cases, and many others, have taught all companies suffering patent troll litigation lessons that are worth hearing. 1. Perform a deep analysis of the patent troll’s complaint. Second, determine if that patent stands up. FINDING SOLUTIONS First, you need to build an inclusive legal strategy. This would have to include the whole litany of options, from invalidity challenges to counter-suits to settlement negotiations. Third, prepare to commit to the resource it will take to fight the lawsuit. This can be expensive, whether it means hiring deep knowledge patent attorneys, performing extensive prior art searches, or bringing the case all the way to trial. Working in coalitions with other companies and industry associations can be incredibly effective. It enables the pooling of knowledge, funding, and other resources backstopping efforts to push for reforms to our current patent system.

Understanding Inter Partes Review (IPR)

IPR has emerged as a strong check on the power of patents, providing an alternative to patent litigation for ensuring the validity of patents. Section 3 of the America Invents Act (AIA) of 2011 enacted Inter Partes Review (IPR). IPR provides a quicker, cheaper alternative to nullify and overturn bad patents than is possible through time-consuming patent warfare. This tool is particularly powerful when used to combat patent assertion entities aka patent trolls. It allows companies to contest bad patents without incurring the overwhelming expense and danger of an entire patent litigation.

How IPR Works in Technology Cases

IPR is an administrative proceeding conducted by the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office (USPTO). Any person or entity can file a petition for IPR to challenge the validity of a patent. This challenge can be done by relying upon prior art, which consists of other patents or printed publications. The petition needs to show a reasonable likelihood that at least one asserted claim of the patent is unpatentable.

The IPR process starts with the challenger filing a petition. The patent owner is permitted to file a preliminary response. In this reply, they’ll explain why the IPR should not be adopted. The PTAB considers the petition and any preliminary response and determines whether to institute the IPR. Once the IPR is instituted, the PTAB holds a trial to assess whether the patent claims are valid. Written submissions of evidence, including expert testimony, as well as oral argument for the case make up this trial.

Additionally, PTAB provides a final written decision within one year of initiating the IPR. If they present compelling reasons, they can get this period prolonged by up to another six months. If the PTAB determines that the challenger succeeded in proving that the patent claims are unpatentable, it cancels those claims. The PTAB’s decision is appealable to the U.S. Court of Appeals for the Federal Circuit.

IPR does a superb job of adjudicating complex technology cases. It focuses on prior art and makes the resolution of complex technical issues more efficient. These judges are technical experts serving as patent attorneys for numerous parties. Most importantly, they have the skills necessary to understand the nuances of both patent law and technology. This makes IPR a more reliable and predictable forum for resolving patent disputes than traditional litigation, which can be subject to the vagaries of jury trials.

Cost Implications and Effectiveness

One of the biggest benefits of IPR, as it has been widely noted, is its comparatively low cost over the expense of patent litigation. It gets far more expensive quickly. Although I’m often quoted as saying, filing and prosecuting an IPR petition typically costs $300,000-$500,000, defending a patent case all the way through trial can cost upwards of $6 million. An investment of $300,000 or more for an IPR is a significant investment. It often only accounts for a small percentage of the possible damages at issue or the cost of continued litigation.

Beyond being more cost-effective, IPR is a very effective tool for invalidating patents. Academics have documented that upwards of 85% of the patents challenged in IPR are ultimately determined to be invalid. This impressive success rate ensures that IPR has emerged as a powerful weapon against patent trolls. An IPR win removes the patent from consideration. This ensures that the entire industry benefits, as opposed to only parties involved in a single suit, like in a settlement or victory in a lawsuit.

Not only does a successful IPR defeat the immediate threat, but a successful IPR can often set important precedents that discourage future suits. Putting even a few hundred thousand dollars into an IPR can be a shrewd investment to remove potential liability or create leverage for a favorable settlement. This strategy is immensely more economical than fighting a patent lawsuit to trial, which can quickly escalate into the tens of millions of dollars.

The efficacy of IPR is compounded by its relatively streamlined timeline. That is, the PTAB is required to issue a final written decision within one year of instituting the IPR. This has enabled tech companies to settle their patent disputes in a matter of months, rather than the years it would take in conventional litigation. This can save companies a lot of time and money and get them back to doing what they do best—focusing on making their business thrive.

Community Initiatives and Industry Support Systems

Collective community action and industry-supported infrastructure is key in the ongoing battle to protect against predatory patent claims. They step up to the plate when patent trolls are knocking on their door. These joint projects combine resources and expertise. They support comprehensive reforms to the patent system, thus forming an unlikely but powerful alliance with patent trolls. Upon hearing these stories, other organizations and initiatives have formed to assist the companies and people facing patent troll lawsuits. Through these programs they provide legal support, technical guidance and financial resources.

Grassroots Movements Against Patent Trolls

Now, grassroots movements are searching for that prior art. Say powered by developers and enthusiasts, they hope to use these to help challenge patents owned by patent trolls such as Malikie Innovations Ltd. The culmination of this collaborative process is bringing the community together around the collective intelligence. Together, we find the prior art that can invalidate the patents and upend the trolls’ arguments.

In January 2022, Jack Dorsey, Aaron Krowne, and others announced the Bitcoin Legal Defense Fund. This effort is one of the most effective grassroots campaigns to educate and protect potential Bitcoin developers from unwarranted, frivolous lawsuits. Beyond his lawsuit, the fund has been very supportive of Bitcoin Core developers, offering financial backing and legal representation. It supports them while they are being sued, including by Craig Wright suits on Bitcoin technology. The Bitcoin Legal Defense Fund is a testament to the community’s commitment to protecting Bitcoin’s integrity and fighting for what’s right. It further demonstrates their allegiance to keeping it decentralized.

Cloudflare introduced Project Jengo four years ago. It’s this grassroots movement that truly buried patent trolls. Project Jengo simultaneously funded cash bounties for prior art on every one of a troll’s patents. This strategy went past the patent-at-issue alone. This novel tactic turned the tables by placing the troll on the defensive. It further invited the public to submit relevant prior art which would invalidate the patents.

These citizen movements show an inspiring example of how communities can join together and be effective in the fight against patent trolls. When people and institutions combine their efforts, they are an unstoppable front against predatory patent threats. Through knowledge sharing and leveraging their collective firepower, they can lead to great change.

Collaboration Among Industry Stakeholders

Industry collaboration is the key to developing the most powerful and effective IP troll defense. A number of coalitions have formed to coordinate efforts and offer assistance to companies being attacked by patent trolls.

The Crypto Open Patent Alliance (COPA), established in 2020 by fintech and crypto companies including Block and Coinbase. Its mission is to inspire its members to pledge not to offensively assert their own crypto-related patents while actively working to challenge any patents that threaten the community. COPA offers an avenue for companies to collaborate, exchange information, develop strategies, and work together on litigation to challenge these bad patents.

Unified Patents is another organization that offers a group defense to patent trolls. Unified Patents collects annual dues from member companies and challenges patents that threaten those companies' industries at no extra cost to individual members. This group effort allows businesses to combine their resources. It ensures they’re better able to share the costs of challenging bad patents, making it cheaper and easier to effectively combat patent trolls. In late 2024, COPA established a partnership with Unified Patents. Jointly, they launched a “Blockchain Zone” to fight NPE-held blockchain and crypto-related patents.

These industry support systems save tremendously helpful resources and equally essential support of industry members to companies on the defense from patent troll lawsuits. Working in concert with other businesses and nonprofits increases a company’s likelihood of beating back patent trolls. This collaboration furthers their collective mission to protect their innovations more efficiently.

Consequences for Bitcoin and Comparisons with Other Sectors

The danger that patent trolls represent would be an extremely dangerous one for the Bitcoin ecosystem to face, threatening both its security and decentralization. This Bitcoin community can take steps to be more insulated from the threats that patent trolls bring with them. They can do this by knowing the possible impact and weighing that against systemic issues facing other industries.

Potential Effects on the Bitcoin Ecosystem

If patent trolls are able to successfully enforce their patents against Bitcoin miners, mining operations will incur significant additional costs. This last threat has the potential to deeply eat into profitability and even drive some mining operations out of business. This, in turn, would have serious implications for the security and decentralization of the Bitcoin network. The more consolidated the control of mining power on the network, the more precarious and fragile the network becomes. This monopolization raises the stakes of targeted attacks and censorship.

Patent litigation is a dangerous scourge on innovation in this industry sector. Fifth, companies will be reluctant to invest in truly innovative new technologies if they are worried that they will be sued for patent infringement. This would ultimately discourage the innovation of more efficient and sustainable mining technologies. Ultimately, it would damage the long-term growth and sustainability of the Bitcoin network.

The uncertainty sown by patent troll lawsuits might harm the very value that Bitcoin and other cryptocurrencies could bring. Investors will become wary of making new inroads to a crypto space. Or they could view it as flammable kindling for patent troll arsonists. This could lead market capitalization and liquidity to dry up. As evidenced by the many failed cryptos, Bitcoin and other similar cryptocurrencies are unlikely to achieve widespread adoption.

Similar Challenges Faced by Other Industries

Industries from the software, telecommunications and biotechnology sectors have suffered from the same scourge of patent trolls. These industries have developed various strategies for combating patent trolls, including forming industry alliances, lobbying for patent reform, and challenging patents in court.

The software industry has led the charge against patent trolls. Groups such as the Electronic Frontier Foundation (EFF) have been on the front lines opposing software patents. They support strong reforms to the patent system. The EFF has just launched their Patent Busting Project. Created in 2012, this project encourages the public to submit the prior art they discover to support invalidating predatory software patents.

The telecoms industry is one of those that have been hit particularly hard by patent trolls. Companies such as Cisco and Verizon have been regular victims of patent troll lawsuits. These firms have been proactive in creating industry coalitions. A great example is the broad, bipartisan Coalition for Patent Fairness, which has fought to reform an outdated patent system.

The biotechnology industry has been one of the other notable success stories from patent troll reform, most significantly in the field of genetic testing. Companies such as Myriad Genetics have previously been sued for patent infringement using patents covering the specific methods, such as nucleotide-base sequencing. These are the companies that Amazon, Google, Uber and Lyft are actively disvalidating through court. They’re getting on board with positive reforms to make the patent system work better.

The Bitcoin community has a lot to learn from the experiences of other industries. Only then will they be able to lead the way against these anti-innovation extortionists. You concentrate on building effective industry coalitions and consistently advocate for patent reform. You further fight bad patents in court yourself and by funding grassroots efforts to try and invalidate them.

Final Thoughts and Future Considerations

The threat posed by patent trolls to the burgeoning Bitcoin mining industry is not fictitious, and demands a preemptive and concerted attack. The Bitcoin community is best positioned to protect the integrity and longevity of the network by educating themselves on patent trolls and their predatory tactics. Further, marshalling community support is an important step in this battle.

Strong community support is key to fighting back against these patent trolls. You believe in supporting organizations that challenge bad patents. You join us in supporting legal defense funds, and in fighting for reforms to the disastrous patent system. Through collaboration, the community can build a robust and impactful community defense against patent trolls.

As we move forward, we need to be vigilant against patent trolls. So, here’s to remaining flexible and being willing to change our approaches. Follow along with all the new sock patents being filed. Do your own in-depth prior art searches and be prepared to litigate bad patents in federal court! Supporting reforms to the patent system is more important than ever. These commonsense reforms are needed to curb patent trolls’ rampant system abuse.

The Bitcoin community has a proven track record of tackling challenges and fiercely protecting the ideals of decentralization and innovation. If we work together, we can beat back patent trolls. If we remain watchful and wise, our fellowship will ensure Bitcoin remains healthy and thriving for decades to come. KnowingCoin.com is here to equip you with the tools and wisdom necessary to take your chain and win the game.