How and when will the actions of “patent trolls” be curtailed?
Intellectual property lawyers have privately expressed skepticism anything will be done to limit the actions of “patent trolls,” companies that exist solely to buy and assert patents, despite extraordinary interest from the public, and Congress.
On Wednesday, July 17th, the anti-patent troll movement gained momentum as a letter was written, signed by 50+ organizations — including the Retail Industry Leaders Association, the Electronic Retailing Association, and the National Retail Federation — and delivered to the chairs and minority leaders of U.S. Congress. Undoubtedly aiming to strike a nerve, the letter explains companies are being forced to deal with patent trolling, which causes loss at the expense of innovation, economic growth, and job creation.
The letter notes that since 2005, the number of defendants sued by patent trolls has increased four-fold. In 2012, patent trolls sued 7,000+ defendants, and on top of those court cases, thousands of threat letters have been sent. “This activity cost the U.S. economy $80 billion in 2011, and productive companies made $29 billion in payouts,” the letter says. The letter also mentions large, technology-based corporations are not the only targets of patent trolls; they are now going after small and medium-sized businesses of all types.
The management of patent suits has become a distraction for many American businesses. For instance, Motorola Mobility was sued in late 2011 by Intellectual Ventures, accusing them of violating several of patents involving file transferring and image projection. This case is still pending, yet, hasn’t stopped Intellectual Ventures from filing a second lawsuit against Motorola Mobility last month — this time claiming several Motorola devices infringe on key parts of seven different patents.
Retailers have become a popular target of patent trolls largely thanks to retail’s use of cutting-edge innovations, especially in online and mobile retailing. POS, signage, inventory, supply chain, loss prevention, and even the attachment of documents to e-mails, have become bull’s-eyes for patent trolls to hone in upon. Small businesses seem to have a larger target on their back as they do not have the money or legal expertise to fight back. In Old Lyme, CT, Southeastern Employment Services, an employment agency that finds jobs for people with disabilities, was sent a letter by FolNer LLC, a patent troll, claiming it owned the patent on the scan to e-mail feature on Southeastern Employment Services’ copy machine, and demanded a $75,000 licensing fee — an outrageous fee for any business based on a false claim. Southeastern Employment Services and its attorneys are awaiting response from FolNer to explain their case.
Currently, six pieces of legislation have presented different methods of deterring trolls. Included in these is the SHIELD Act, introduced by Reps. Peter DeFazio (D-Oregon), and Jason Chaffetz (R-Utah). This Act will force patent trolls into financial accountability for their lawsuits by allowing defendants to recover money spent in defending themselves against junk suits. More recently, the Patent Litigation and Innovation Act was introduced last week by Reps. Blake Farenthold (R-Texas), and Hakeem Jeffries (D-NY). This legislation is intended to address flaws in patent litigation which patent trolls exploit in hopes of reaching a quick settlement.
Solving the patent troll issue will not be an easy task, but attention is clearly being paid to the issue. A wide range of businesses and associations with money, power, and influence are aiming to prove those skeptical, intellectual property lawyers wrong by acting now.
