AI Patent Extortion: Demanding Exorbitant Damages from Users via AI-Generated Code Patent Applications

Who Gets Targeted

The victims are mostly tech startups and small-to-medium-sized internet companies established within the past three years, as well as teams lacking dedicated intellectual property legal counsel. To iterate products quickly, these enterprises are accustomed to acquiring code directly from open-source platforms or AI tools. They have a vague understanding of patent ownership for AI-generated code and often choose private settlements upon receiving attorney letters out of fear of project stagnation and excessive litigation costs, making them primary targets for extortionists.

骗局怎么运作

• Step 1: Extortionists publish AI-generated code repositories that appear open-source and usable on platforms like GitHub and Gitee, or upload relevant code snippets to public AI code-sharing communities. Upon publication, they embed ambiguous copyright notices in README files and LICENSE agreements or obscurely label them with 'related technologies have applied for patent protection,' exploiting developers' tendency to overlook fine print to fabricate a 'basis' for subsequent claims. Some extortionists even disguise themselves as public-benefit tech sharers, using 'free efficient code templates' as a pitch to attract users to download and use them.
• Step 2: Extortionists use AI patent-writing tools to rapidly package the core logic and algorithmic concepts of the code implementation into patent application documents, submitting invention or utility model patent applications to the China National Intellectual Property Administration (CNIPA) via low-cost proxy submission methods. Because the efficiency of AI-generated patent documents far exceeds human efforts, and the patent examination cycle for certain software algorithms is relatively short, extortionists can often obtain a patent application acceptance notice or a preliminary examination qualification notice within 3 to 6 months as 'official credentials' for subsequent pressure, with some even forging patent authorization certificates to increase confusion.
• Step 3: Once the patent enters the publication period or obtains an application number, the extortionists form a fake 'intellectual property rights protection team' or cooperate with rogue law firms to send formal attorney letters via corporate public emails and industrial/commercial registration information channels to enterprises that have downloaded or used the code in the past. The letters include the patent number (or patent application number) and code comparison reports, typically stating that 'the XX function used in your product falls within the scope of our patent protection, constituting infringement. You must pay XX ten thousand yuan in compensation or sign an annual licensing agreement within 10 days, otherwise a lawsuit will be filed in court and a preliminary injunction will be applied for to freeze your assets.'
• Step 4: If the victim enterprise questions the authenticity of the patent, extortionists escalate pressure: on one hand, they forge documents such as patent search reports and expert appraisal opinions, claiming the patent has passed official review; on the other hand, they arrange 'mediation specialists' to proactively contact victims, offering false concessions such as 'installment payments' or 'compensation reductions,' and even threatening to send infringement notification letters to the victim enterprise's investors and core clients, exploiting the enterprise's panic over harming financing and partnerships to force rapid wire transfers.
• Step 5: After the victim enterprise completes the transfer, extortionists immediately deregister the temporarily registered law firms, close the domain names corresponding to the collection accounts, cut off all contact channels, and launder the illicit funds through multi-level accounts. Because extortionists often operate using virtual identities and overseas servers, victim enterprises are almost unable to trace fund flows after discovering the fraud, nor can they recover losses through judicial channels, forming a closed loop of one-off extortion.

红旗信号（看到这些快跑）

• 🚩 Attorney letters received lack a regular law firm official seal, licensed attorney signature, or the law firm name cannot be queried on the National Attorney Practicing Information Publicity Platform.
• 🚩 Only the patent application acceptance notice is provided during claims, failing to provide a valid patent authorization certificate, and the patent content has extremely low correlation with the claimed infringing code.
• 🚩 Requests to pay compensation to personal accounts or overseas accounts, or requests for transfers via cryptocurrencies or non-public payment channels, while refusing to use corporate business-to-business settlement accounts.
• 🚩 Frequent use of high-pressure phrasing in communications such as 'pay within a time limit or face lawsuits,' 'asset freezing,' and 'public exposure,' while refusing to provide appeal channels for patent invalidation declarations.
• 🚩 The provided patent search report lacks the seal of a regular patent agency, contains pieced-together content with illogical reasoning, or the patent publication date is later than the time the victim enterprise used the code.

真实案例

• In April 2026, Tencent News reported the sentencing of the country's first AI model infringement case. An AI startup was ordered to pay a total of 1.6 million yuan in economic losses and reasonable rights protection expenses for allegedly infringing upon another party's software algorithm patent. The case attracted widespread industry attention due to involving the determination of patent ownership for AI-generated code. Source: [https://news.qq.com/rain/a/20260423A07JIA00](https://news.qq.com/rain/a/20260423A07JIA00)
• In July 2026, 36Kr reported that multiple gangs copied code from Anthropic's open-source Claude Code to apply for patents, launching claims against dozens of enterprises worldwide that used related code. Some enterprises were forced to pay high licensing fees due to being unable to prove the legal source of the code, exposing the patent risks of open-source AI code. Source: [https://36kr.com/p/3747613304193796](https://36kr.com/p/3747613304193796)
• In February 2026, a notice on abnormal patent applications published on the official website of the China National Intellectual Property Administration showed that a certain gang used AI generation tools to batch-generate over 30 software-related patent applications, launching claims against more than 50 domestic enterprises using similar open-source code. Ultimately, all patent applications were completely rejected, and the individuals involved were listed on the adverse patent agency blacklist and placed under investigation. Source: CNIPA February 2026 'Abnormal Patent Application Notice'

Official Stance

• On June 10, 2026, the China National Intellectual Property Administration released the 'Risk Warning on Preventing Malicious Patent Litigation in the AI Field,' clearly advising enterprises to conduct patent screenings before using AI-generated code to avoid infringement risks.
• On July 15, 2026, the Internet Society of China, in conjunction with multiple intellectual property law firms, released the 'Guide to Responding to Patent Extortion in the AI Field,' listing common phrasing, identification methods, and rights protection channels for patent extortion.
• On May 20, 2026, the Supreme People's Court issued the 'Provisions on Several Issues Concerning the Application of Law in the Trial of Malicious Patent Litigation Dispute Cases,' clarifying that punitive damages can be applied to acts of maliciously initiating patent litigation, with a maximum penalty of up to three times the actual losses of the right holder.

How to Protect Yourself

• ✅ Before introducing AI-generated code, enterprises must conduct comprehensive patent screenings of the core algorithms and functional points involved in the code through regular platforms such as the CNIPA patent search system and Google Patents, confirming that there are no identical or similar patents before putting them into use.
• ✅ When signing usage agreements with AI code service providers and open-source communities, explicitly stipulate patent ownership clauses, require the other party to promise that the code does not infringe upon third-party patent rights, and establish corresponding breach of contract liabilities.
• ✅ Establish an internal intellectual property early-warning mechanism, regularly evaluate patent risks for AI code and algorithms in active use, equip teams with dedicated or part-time intellectual property legal personnel, and conduct official verification of unfamiliar attorney letters immediately upon receipt.
• ✅ When encountering patent claims, do not blindly transfer money for private settlement. You should first verify the authenticity of the patent with the China National Intellectual Property Administration or local intellectual property bureaus, report the case to public security organs if necessary, and retain all communication records, transfer vouchers, and other evidence.