An insurance executive roundtable we recently hosted discussed some of the similarities between patent trolls and the rise in data privacy lawsuits. Below are some of the viewpoints and topics covered comparing NPE’s and Privacy Lawsuit Mills.
1. High Volume, Low Merit Lawsuits
- Patent trolls (formally “non-practicing entities”) acquire old patents and sue dozens or hundreds of companies — not to protect innovation, but to extract settlements.
- Privacy trolls use laws like the California Invasion of Privacy Act (CIPA), Video Privacy Protection Act (VPPA), or wiretapping statutes to file mass lawsuits over session replay tools, analytics trackers, or pixel use.
- Both aim for quick settlements to avoid legal costs and PR damage. Some go through arbitration like Swigart Law does in the majority of cases.
2. Alleged Weaponized Legal Loopholes
- Patent trolls exploited vague, outdated patents.
- Privacy trolls exploit technical violations: failure to disclose pixel tracking, session replays, or share user data with third parties — even without harm.
- Both rely on strict liability frameworks, not actual consumer injury.
3. Targets Are Often Mid-Market Companies
- They go after brands with enough cash to settle but not enough legal muscle to fight back.
- Suits are filed en masse — similar complaints across industries (retailers, SaaS, media, healthcare).
4. Class Actions as a Business Model
- The incentive structure is about volume, not justice.
- Plaintiffs’ firms use cookie-cutter templates and mass discovery tactics.
- Often funded by litigation finance firms.
RPX Corporation: A Playbook for Privacy Defense?
RPX (Rational Patent Exchange) formed in 2008 to protect companies against patent trolls by:
- Acquiring dangerous patents to prevent litigation
- Creating a consortium of member companies (Google, Cisco, etc.) who paid annual fees for protection
- Settling or buying out troll lawsuits on members’ behalf
- They went public in 2011 (Nasdaq: RPXC), showing investor confidence in a “defensive moat” model
Privacy Parallel Between the Two?
We discussed if there is enough demand for an opportunity to build a similar “privacy compliance consortium”:
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- Defensively settle class actions before trial
- Fund group legal defenses and court challenges to bad precedent
- Share detection tools to avoid risky behavior (like Facebook pixel usage on login pages)
Such a service could even expand to:
- Shared compliance audits
- Pooled D&O insurance
- Pre-litigation intelligence feeds (who’s suing whom, where, and why)
One of the potential issues is if businesses are not adhering to proper privacy compliance measures then they are in fact in violation of the law even if it is a troll they will need to adhere to the law.
Why This Is Especially Relevant in 2025
- Privacy lawsuits are surging — fueled by new state laws and requirements (Texas, Florida, Maryland, Minnesota, Maryland, Tennessee, Oregon) and retroactive tracking claims
- Hundreds of CIPA and VPPA lawsuits have been filed against companies using analytics or marketing tools
- No federal preemption exists — so litigation mills are thriving across fragmented jurisdictions
- Companies like Kochava, Clearview AI, and The Weather Channel have all faced major privacy suits
The Takeaway To Create a Privacy Consortium or Not?
Just like RPX neutralized patent trolls by organizing defendants and preemptively removing weapons, the privacy world is ripe for:
- A consortium-based privacy defense strategy
- Legal and technical pre-screening
- “Privacy RPX” for modern class-action exposure
Captain Compliance could be a powerful future offering: a subscription-based defense layer that helps mid-market companies lower litigation risk, pool knowledge, and proactively identify privacy exposure.
A similar model on the patent troll and defense side can be leveraged through an AI-powered platform to help plaintiffs’ firms generate efficient, targeted demand letterspart of a shift toward more aggressive, high-volume privacy litigation:
- An AI-driven platform designed for law firms to draft and send personalized demand letters.
- Automate the identification of statutory damages, tailoring letters to each plaintiff’s jurisdiction and potential liability—even without actual harm.
- Enable plaintiffs’ attorneys to scale up: instead of manually drafting dozens of demands, they can deploy hundreds or thousands, increasing legal pressure and settlement odds.
How This Could Power Mass “Plaintiffs Attacks”
Think of this as a “volume play” similar to patent or privacy trolls but for broader claims:
- Identifying Targets
Firms scan publicly available data (like cookie banners or session-replay tags) to detect potential victims. - Automated Letter Generation
AI crafts individualized letters citing specific violations (e.g., “VPPA violation for failing to notify of video tracking”) and quotes applicable statutory damages, tailored to each company and jurisdiction. - Pressure Tactics
The sheer volume creates urgency: many companies prefer to settle rather than litigate, even if the violation seems minor or technical. - Economic Incentive
Standard letters often demand several thousand dollars—multiplied across hundreds, this creates lucrative returns for plaintiffs’ counsel.
Why This Mirrors Patent Troll Behavior
| Feature | Patent Trolls | EvenUp-Enabled Privacy Plaintiffs |
|---|---|---|
| Automation at scale | Yes — bulk letters based on patent portfolios | Yes — AI draft hundreds of privacy demands |
| Weak merit threshold | Exploits vague patents | Exploits technical/legal loopholes (e.g., tracking pixels) |
| Settlement pressure | Quick settlements to avoid costly defense | Same dynamic—avoid legal fight & PR risk |
| Profitable volume | High ROI through settlements | High ROI via reproducible demand letters |
Impact on Companies & Counsel
- Defensive scramble: Organizations must quickly audit tracking/script use or be hit with mass letters.
- Legal workflow shift: In-house counsel now need rapid response teams, template-driven rebuttals, or flat-fee negotiations.
- Banding together: Just like patent consortia (e.g., RPX), some companies are reportedly exploring pooled defense or shared insurance models to counter volume plaintiffs.
- Regulatory ripple effect: Regulators take note—some may intervene or issue guidelines if mass plaintiffs create chaos in compliance landscapes.
Similarities & Differences
Patent Trolls and Privacy Lawsuit Mills differ from AI Software for Plaintiffs Attorneys are not filing lawsuits directly—it’s fueling them:
- Provides attorneys with a scalable engine for mass demand letters.
- Amplifies settlement pressure, especially for mid-market companies without deep legal resources.
- Represents a clear evolution of “privacy trolling”, echoing tactics used by patent-assertion entities.
- Forces companies to prioritize automated compliance or risk becoming targets.
Privacy litigation trolling may become a thing of the future. Either way its good to protect your business by being proactive.
