Central Penn Business Journal
Editorial: Patent trolls sap money, time from legitimate businesses
Posted September 6, 2013 at 3:00 AM
First it was small tech companies and software developers, then businesses using basic office equipment such as copier/scanners. Now just about any enterprise — restaurants, grocery stores, Main Street retailers, online entrepreneurs — could get a demand letter from a patent troll.
Like cockroaches scuttling in the shadows, patent trolls — or non-practicing entities, as they are termed in the legal world — depend on silence and invisibility. They avoid tangling with major companies and go after small end users. They’re called “non-practicing” because NPEs obtain the patents for the sole purpose of monetizing them after the fact.
The operative word in this sleazy world is “small.” Generally, trolls hold patents on basic technologies that have been incorporated into more-complex systems, often getting their hands on them after the initial patent runs out. They go after small users of the technology as most apt to pay up rather than risk a costly court fight. And, in a divide-and-conquer approach, trolls frequently write nondisclosure agreements into their “settlements.”
Yet they wreak enormous havoc. NPEs may reap only a few thousand dollars per demand, but legal experts estimate patent trolls collectively pulled roughly $29 billion out of legitimate business operations in 2011 alone.
Think it can’t happen to you? Some of the more recent targets have been businesses that use real-time tracking to estimate product or service delivery times for customers and businesses that use the JPEG format to post or email photos for promotional purposes.
Patent trolls claim they’re simply protecting their intellectual property rights by the only means at their disposal, since they’re “small,” too, and can’t afford to fight the tech giants benefiting from the patents in question.
But the United States is virtually the only country that has this problem. There’s been considerable talk in Washington, D.C., about the issue, but although a half-dozen bills have been proposed, nothing has advanced. Meanwhile, some states (though not Pennsylvania) have successfully challenged trolls by broadening their interpretation of consumer protection laws.
A coalition of 50 organizations sent a letter earlier this summer to Congress urging action. Four groups — The Internet Association, National Restaurant Association, National Retail Federation and Food Marketing Institute — followed up last week by launching an ad campaign to heighten awareness of the issue.
How can you protect your business? Don’t wait to be a victim. Educate yourself on how patent trolls operate. Then add your voice to those working to stamp out these vermin of the tech world.