The Daily Nonpareil
Guest opinion: To boost Iowa’s businesses, put a stop to patent trolls
Posted 11/07/2013 12:00 AM
Most people have never heard the term “patent troll.” But when they learn about the way these entities squeeze billions of dollars out of businesses by abusing our patent system, they are shocked that there’s little deterring the trolls from unwarranted attacks and limited safeguards in place protecting businesses from frivolous lawsuits. The result of the trolls’ actions is a drain on our economy totaling $80 billion annually, leading to fewer jobs and higher costs for consumers.
Fortunately, there’s growing momentum for reform to put an end to this abuse and stop the trolls once and for all.
Restaurants, convenience stores, hotels, grocery stores, tech startups and even charities across Iowa and the nation are facing this same threat, and it’s costing them millions.
Patent trolls do not create, make, sell or produce anything. All they do is sue and intimidate productive businesses-and make billions in the process.
Trolls take advantage of overly broad, low-quality patents that often cover everyday business practices like accepting job applications online, scanning documents to email or providing customer loyalty programs. The trolls send thousands of letters each year to businesses that use these practices demanding that they pay a licensing fee or face a lawsuit.
Often, the letters come from shell companies making it hard for those targeted by the trolls to figure out who they are up against and what the specific patent in question covers. What’s more, when lawsuits over patents covering common business practices do go to trial, the trolls lose 85 percent of the time.
The trolls’ demand letters leave their recipients with two undesirable choices: Pay the troll an exorbitant sum to go away, even if there has been no legitimate patent infringement, or go to court and pay even more in legal fees whether you win or lose.
Any way you look at it, Iowa’s businesses lose.
Take Don Schoen, for example, an Iowa entrepreneur who is seeking to create great technologies and jobs here in Iowa, but unfortunately, found himself embroiled in a battle with a known patent troll that cost over $1 million.
Similarly, Hy-Vee, an Iowa-based, employee-owned grocer and staple in our community has also found itself wrestling with patent trolls – a match that diverts valuable resources and serves as an unnecessary distraction to the company.
The average cost for small-and medium-sized businesses to make the trolls go away was $1.33 million last year, while fighting the trolls in court cost an average of $1.75 million. That’s money these businesses cannot spend on hiring new workers or investing in their businesses.
Fortunately, more and more companies are speaking out. Recently, business leaders from western Iowa came together at the Council Bluffs Chamber of Commerce to discuss the growing threat of patent trolls to Iowa businesses and to urge swift congressional action to address the problem.
As the scale of the problem becomes clear, policy makers are responding.
Republicans and Democrats in Congress have introduced a number of different bills designed to stop this abuse of our patent systems. Sen. Charles Grassley, R-Iowa, recently co-sponsored legislation that would ensure transparency in patent lawsuits and change the trolls’ incentives by requiring the loser of these cases to pay both sides’ court fees, deterring frivolous suits. This is welcome legislation.
So too is the proposal to expand the Patent and Trademark Office’s covered business method program, which will make it easier to weed out low-quality patents and give companies targeted by trolls a quicker and faster way to challenges the trolls’ claim than going through the court system.
Reform that stops this problem once and for all will be a boost to Iowa’s businesses and allow them to get back to hiring workers and innovating rather than worrying about the threat of frivolous lawsuits.
Increasing transparency, discouraging frivolous suits and giving companies new avenues to fight back would do just that.