Monthly Archives: September 2013

September 30, 2013 | Letters

The Internet Association Signs Letter Supporting Congressional Transparency Legislation

The Internet Association signs letter supporting transparency legislation in Congress.

Excerpt:
We the undersigned are writing to ask that the Senate and House Judiciary Committees quickly forward to consider legislation that would provide greater transparency around national security–related requests by the US government to Internet, telephone, and web-based service providers for information about their users and subscribers.  Specifically, we write to voice our strong support for S. 1452, the Surveillance Transparency Act of 2013, and H.R. 3035, the Surveillance Order Reporting Act of 2013, each of which would clarify that companies have the right to publish basic statistics about the government demands for user data that they receive.  We urge the Committees to hold hearings on the issue of surveillance transparency as a prelude to the markup of these bills.

To read the letter The Internet Association signed today, click here.

September 23, 2013 | Statements

The Internet Association Statement Regarding Chairman Goodlatte’s Patent Reform Discussion Draft

WASHINGTON, D.C. – Michael Beckerman, President and CEO of The Internet Association, released the following statement today regarding U.S. House Judiciary Committee Chairman Bob Goodlatte’s introduction of draft patent reform legislation:

“The Internet Association applauds Chairman Goodlatte’s hard work to explore a solution to the growing problem of patent troll litigation. Patent trolls cost the economy billions of dollars and pose a drag on innovation. The release of this draft legislation is an important step toward tackling this problem. The Internet Association will examine the new draft closely to ensure that it includes meaningful reform that puts the patent trolls out of business.”

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September 22, 2013 | ICYMI, News, Op-Eds

ICYMI- Miami-Dade Taxi Market Needs Competition

Miami Herald
Miami-Dade taxi market needs competition
Posted: September 9, 2013

BY MICHAEL BECKERMAN

Miami has some of the most restrictive and anti-competitive transportation laws in the nation.

In Miami today, if you request a car service outside of the regulated taxi market and it arrives to pick you up in 15 minutes, by law you must wait an additional 45 minutes before you are legally allowed to begin your trip. If you enter the vehicle before waiting the requisite hour, the car can be impounded and the driver fined. In addition to the wait-time requirement, the minimum fare is $80 — no matter the distance of the trip.

Furthermore, there is an artificial cap placed on the number of sedans allowed to operate in Miami-Dade County. These outdated rules are imposing extreme limits on consumer choice and driver opportunity, preventing Miami residents from using one of the hottest and fastest growing Internet start-ups in the country: Uber.

Uber is an innovative car-for-hire app that connects drivers with riders for on-demand transportation. The company is operating in 42 cities worldwide, but Miami’s antiquated regulations are preventing the company from bringing its service to the area. Not surprisingly, established taxicab companies, which have been shielded from competition for years, are fighting to keep their sweetheart deal, to the detriment of their own drivers, consumers and the reputation of the city.

Uber uses the Internet to connect riders with drivers, much the same way that Expedia connects airlines with would-be flyers. It’s cashless, with users’ credit-card information stored on the app. And it’s interactive, allowing riders to rate their drivers, improving the quality of its service.

Uber showcases what an innovative company can do to promote competition and drive economic growth and job creation. Uber’s Internet-enabled platform has revolutionized urban transportation options for riders, drivers and cities across the world. If the Miami taxi market had true competition, we would not see these current barriers that deter innovative progress in this great city.

Competition in the marketplace is good for consumers. It keeps prices low while increasing the quality and choice of services. It also encourages businesses to innovate, bringing new and better products and services to the market. In markets without competition — like Miami-Dade’s transportation sector — stagnation, poor service and high prices are the norm.

All regulation is not bad. Consumer protection is a vital function of regulators and rules ensuring safety, preventing fraud and deterring abuse are most certainly in the public interest. However, in Miami-Dade, we confront a perverse situation in which the current rules are stacked to protect incumbent operators from new competition while limiting consumer choice. That’s a lose-lose proposition.

Miami-Dade County leaders have the opportunity to show their constituents and the world that they are willing to stand up for the future of Miami. Soon, the Miami-Dade County Commission will consider a package of reforms designed to modernize the city’s antiquated laws and regulations.

If enacted, Miami-Dade County will be the first major city in the United States to begin proactively unwinding its anti-competitive taxi regulations that have imposed unreasonable constraints on consumer choice and small business growth. The package of reforms, sponsored by Commissioner Audrey Edmonson, would be a great step forward for consumers and small business innovation alike — and a strong signal to Miami’s growing startup community that the county is open for business.

Bringing competition to Miami’s transportation market will result in more choices, better prices and higher quality. Internet start-ups like Uber are driving economic growth and job creation in cities all over the world. Why should Miami be left behind? County commissioners should not let the anti-competitive needs of a few take precedence over the needs of their constituents, the county’s drivers and this world-class city’s continued growth.

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To read the original article, click here.

September 22, 2013 | Op-Eds

Patent Trolls Damage Innovation Here and Across the Country

The Day – Connecticut
Patent trolls damage innovation here and across the country
Posted: 09/22/2013 12:00 AM

There’s a growing and pernicious threat facing Connecticut’s businesses: Patent trolls. These companies, also known as patent assertion entities (PAEs), exist solely to exploit and intimidate based on dubious or overly broad patents, hurting businesses and stifling innovation. Using the threat of litigation, patent trolls are targeting an increasingly broad array of businesses – moving on from just technology companies to Main Street businesses – and sucking billions out of the economy while doing it.

Major Connecticut companies like Sikorsky, ESPN and Foxwoods have all been sued by patent trolls. But so too have small businesses, like Southeastern Employment Services, a company that finds jobs for people with disabilities located in Old Lyme. They received a letter from a patent troll threatening a lawsuit for using the scan-to-email function on its business copier. The patent troll demanded a licensing fee for each employee – a cost totaling more than $75,000. Businesses shouldn’t have to pay outrageous sums of money or go to court just to use the equipment that they fairly and legally purchased or to engage in basic business practices. Small and medium-sized companies are the most frequent patent troll targets, and they cannot afford to fight back.

Companies targeted by patent trolls are being forced to choose between two undesirable options: pay an exorbitant licensing fee to the troll, or go to court. Both options hurt businesses. The average cost for small and medium sized companies to defend themselves in court is $1.75 million, slightly less than the average $1.33 million licensing fee companies are often forced to pay. That’s money that’s not being used to hire workers or create new products.

And the problem is getting worse. The number of patent lawsuits has doubled since 2005. More alarming is that the number of suits brought by PAEs quadrupled in that time, with more than half of all patent-infringement lawsuits brought in the last year being initiated by these entities. The White House recently estimated that patent trolls sent out more than 100,000 patent infringement letters last year alone.

It’s legitimate businesses that are paying the price, literally. U.S. businesses paid out $29 billion to patent trolls in 2011. And when lawyer fees and other indirect costs are added in, the total cost to the U.S. economy came to $80 billion.

The rise in patent cases reflects the expansion of the trolls’ targets. For years, the targets were software developers, Internet companies and start-ups. But increasingly, trolls are going after hotels, restaurants, coffee shops and even charities for common practices like allowing job candidates to apply online, including hyperlinks on their websites, offering an online shopping cart or even providing wifi to customers.

These business method patents – which claim protection for established ways of doing routine business like scanning to email, are some of the most abused. These patents are litigated nine times more often than other patents. And once these cases go to court, the trolls lose 85 percent of the time.

That’s why Congress should act.

In June, the White House issued a package of executive orders and legislative proposals to address this problem. Congress is considering a number of bills to discourage frivolous patent litigation and stop nuisance settlements. Bipartisan legislation has been introduced that would create a cheaper and faster alternative to litigation, by allowing companies to take disputes over business method patents to the U.S. Patent and Trademark Office (PTO) rather than the courts. The administration and the Patent Office should also look at ways to stop bad patents from being issued in the first place.

Taken together, these steps will promote innovation, support U.S. and Connecticut businesses and strengthen our economy. As Congress returns, stopping bad patents and stopping the trolls needs to be a top priority.

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September 19, 2013 | News, Press Releases, Videos

The Internet Association Marks One-Year Anniversary

WASHINGTON, D.C. – The Internet Association, the unified voice of the Internet economy, marks its one-year anniversary today. The IA has enjoyed rapid growth during its first year, doubling its membership since its launch. The association represents the interests of leading global Internet companies including Airbnb, Amazon.com, AOL, ebay, Expedia, Facebook, Gilt, Google, IAC, LinkedIn, Monster Worldwide, Path, Practice Fusion, Rackspace, reddit, Salesforce.com, SurveyMonkey, TripAdvisor, Uber Technologies, Inc., Yahoo!, and Zynga.

The Internet Association posted a video today highlighting the good work of the Internet, one of the greatest engines for economic growth and prosperity the world has ever known.

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“Over the past year, The Internet Association and our member companies have worked together to ensure that elected leaders in Washington better understand the Internet economy,” said Michael Beckerman, The Internet Association President and CEO. “The Internet is the fastest growing sector of the U.S. economy and is creating jobs and increasing American competitiveness every day. We will continue our work to protect the interests of this vital and vibrant economic sector.”

The Internet Association’s mission is to protect and preserve the free, open, innovative, and decentralized architecture of the Internet, which has enabled its tremendous growth and evolution. By channeling the strengths, cultures, and stories of the Internet and its vast community of users, The Internet Association is working to ensure that legislators, regulators, the media, and ordinary citizens understand the positive impact the Internet, Internet companies and the Internet economy have on all aspects of society.

“The Internet is not just Silicon Valley; it fuels every economic sector and creates jobs in every city and town across America,” Beckerman said. “The Internet must not be ignored; we will continue to make our voice heard, educating decision-makers in Washington and across the globe on our rapidly changing sector to ensure that laws facilitate progress, not impede it.”

About The Internet Association
The Internet Association is the unified voice of the Internet economy representing the interests of the leading Internet companies including Airbnb, Amazon.com, AOL, ebay, Expedia, Facebook, Gilt, Google, IAC, LinkedIn, Monster Worldwide, Path, Practice Fusion, Rackspace, reddit, Salesforce.com, SurveyMonkey, TripAdvisor, Uber Technologies, Inc., Yahoo!, and Zynga. The Internet Association is dedicated to advancing public policy solutions to strengthen and protect Internet freedom, foster innovation and economic development, and empower users. The Internet Association is headquartered in Washington, D.C. www.InternetAssociation.org.

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September 17, 2013 | ICYMI, News

ICYMI- In Pictures: Where Do Major U.S. Corporations Stand In The Immigration Debate?

Forbes Magazine
In Pictures: Where Do Major U.S. Corporations Stand In The Immigration Debate?
Posted 9/17/2013 @ 11:06AM

While major U.S. companies complain about shortages of skilled workers and restricted access to visas thousands of undocumented immigrants from Mexico and Central America continue to clandestinely cross unguarded sections of the U.S.’s southern border. The debate over immigration reform, a pressing concern for many U.S. executives, continues to stall in Congress. Last week Steve Womack, a Republican congressman from Arkansas found himself in the spotlight after he responded to a question from a man wearing a t-shirt displaying a Mexican flag. “It does strike me as a bit odd that I would get a question as to why we shouldn’t just automatically make it legal for people who didn’t come here in a legal circumstance, [from a person] with a flag of another country hanging around his neck,” Womack said. “This is just some good old friendly advice. If you want to win friends and influence people on the issues that you are talking about, I would suggest a little different approach in terms of my attire,” he added.

Unlike Womack and several other Republicans in Congress, many major U.S. corporations are taking public stances to welcome immigrants and support immigration reform efforts. After all, the U.S. Citizenship and immigration Services agency has reported that this year, in less than one week companies petitioned for 124,000 H1-B visas for high skilled foreign workers, even though only 85,000 were available. Data from the U.S. Bureau of Labor Statistics indicates that the U.S. economy is home to tens of thousands of job openings for candidates with advanced and highly specific skills. Industry leaders have argued that current immigration rules prevent them from hiring enough foreign graduates with advanced degrees to meet their needs.

In March 2013 tech industry groups such as the Information Technology Industry Council, The Internet Association, and the Silicon Valley Leadership Group joined together to push for immigration reform. In a letter addressed to “The Honorable Barack Obama” tech company CEOs argued that “the United States has a long history of welcoming talented, hard-working people to our shores [and] immigrant entrepreneurs have gone on to found thousands of companies with household names like eBay, Google, PayPal and Yahoo. These companies provide jobs, drive economic growth and generate tax revenue at all levels of government.” In 2012 Yahoo reported nearly $4.5 billion in revenue.

But, it’s not just tech companies pushing for change. Over the last thirty years the dynamics of the migrant flows, both official and undocumented, that cross the Mexican border have transformed. Previously a source of temporary labor in agriculture in southwest border states, migrant laborers from Mexico and Central America now seek employment in a wide variety of economic sectors in a much more geographically dispersed range of locations within the United States. In addition to farm lobby groups, the construction sector, maintenance companies, and the food services industry all have a stake in pushing for immigration reform. These sectors, after all, are all major employers of immigrant workers. McDonald’s MCD  alone earned $27 billion in 2012. Wendy’s, which recently became the U.S.’s second biggest hamburger seller, reported more than $8 billion in revenues. In The Fast Food Nation McDonald’s and Wendy’s hold clout.

Current regulations lead to disruptions not only for corporations and small businesses but also for immigrant families.

According to the Los Angeles Times, “In 2012, more than 400,000 immigrants were returned to their home countries — more than were deported during any year of George W. Bush’s presidency.”

Tefere Gebre, director of the Orange County Labor Federation, recently argued, “When we have a bill for 11 million immigrants to become full Americans, we should not be, in the middle of this, deporting them.” Many major U.S. fast food companies may be inclined to agree. After all a group of human resources executives from the construction, food services, hospitality, and technology sectors recently joined together to send a letter to “The Honorable John Boehner” arguing in favor of immigration reform.

Reform efforts do face stiff opposition from certain sectors. In addition to the conservative think tank The Heritage Foundation, which has spent thousands of dollars for ads attacking reform efforts, a major corporate opponent to immigration reform is the U.S.’s private prison industry.

According to a report from The Associated Press, The Corrections Corporation of America and two rival prison companies have donated $45 million to political lobbying efforts over the last decade.

CCA insists that it is not actively working to influence immigration legislation. According to CCA spokesman Steve Owen, “As a matter of long-standing corporate policy, CCA does not lobby on issues that would determine the basis for an individual’s detention or incarceration.”

While the private prison industry’s executives remain publicly neutral on the topic,several news outlets have reported that behind the scenes money is flowing through their Political Action Committees to politicians who oppose a radical overhaul of the current rules.

Across the U.S., tech industry heavyweights, fast food giants, and private prison companies all have a stake in immigration reform.

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September 9, 2013 | News, Press Releases

The Internet Association Welcomes Uber Technologies, Inc.

 

INNOVATIVE APP COMPANY JOINS THE  UNIFIED VOICE OF THE INTERNET ECONOMY

 

WASHINGTON, D.C.The Internet Association, the unified voice of the Internet economy, is pleased to announce that Uber has joined its growing membership alongside global industry leaders such as Airbnb, Amazon.com, AOL, ebay, Expedia, Facebook, Gilt, Google, IAC, LinkedIn, Monster Worldwide, Path, Practice Fusion, Rackspace, reddit, salesforce.com, SurveyMonkey, TripAdvisor, Yahoo!, and Zynga.

Uber Technologies Inc., headquartered in San Francisco, is an innovative ride-for-hire app that connects riders with a range of on-demand transportation options. The interactive online platform operates in 42 cities worldwide. Launched in 2010, Uber is one of the fastest growing start-ups in the country, harnessing technology to expand consumer choice in transportation.

“The Internet Association is proud to welcome Uber Technologies as an innovative member of our association,” said Michael Beckerman, The Internet Association President and CEO. “Uber’s Internet enabled platform revolutionized urban transportation options for riders, drivers and cities across the world. The Internet’s low-barrier to entry has empowered entrepreneurial companies like Uber to transform industries across economic sectors and enhance consumer choice. Uber showcases what an innovative company can do to promote competition and drive economic growth and job creation. We are happy to have them join our voice as we fight to bring down short-sighted barriers that deter innovative progress.”

Media Contacts –
Betsy Barrett
Email: betsy@internetassociation.org
Location: Washington, DC
Phone: (202) 997-3266

Nairi Hourdajian
Email: nairi@uber.com
Location: San Francisco, CA
Phone: (408) 666-1600

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September 6, 2013 | ICYMI, News

ICYMI- New Jersey Firm Stands up to Patent Trolls

Star Ledger/ NJ.com
New Jersey firm stands up to patent trolls
Posted September 06, 2013 at 7:30 AM

In April, a South Plainfield company received notice it was being sued by a Florida law firm alleging six instances of patent infringement. The Florida firm, ArrivalStar, was willing to accept a settlement of $15,000.

Most companies would have paid the money to make the matter go away. Fighting a patent lawsuit in court all the way can cost several million dollars.

But Tumi, a worldwide manufacturer of luggage and handbags with U.S. headquarters in South Plainfield, sensed its company was the target of patent trolls — firms that own a few meaningless patents and send out frightening letters to hundreds of companies demanding payment for “infringement.”

So it fought back.

The patents in this case had nothing to do with luggage design but were loosely linked to how the company tracked customer orders and shipments through its website.

The lawsuit had been filed by a Luxembourg-based nonpracticing entity, or NPE. Nonpracticing entities don’t produce or sell anything or offer services. They make money by getting license fees from companies that use technology that, they allege, is based broadly on patents they have acquired.

Tumi filed a counterclaim, alleging ArrivalStar’s lawsuit was “frivolous,” “baseless” and a “sham” meant to extort money.

A judge dismissed the case because ArrivalStar failed to respond to the counterclaim. Tumi didn’t have to pay a penny to ArrivalStar, and the patent holders promised not to file any more suits against the luggage maker.

It was a rare instance of standing up to what some may call a bully.

There has been a proliferation of patent infringement suits in the past three years by so-called patent trolls — NPEs that fire off lawsuits like buckshot. According to the Government Accountability Office, the number of patent infringement cases had been static between 2000 and 2010. But from 2010 to 2011, patent lawsuits surged by about a third. And one of every five lawsuits was brought by an NPE. The GAO’s analysis also found that lawsuits involving software-related patents accounted for about 89 percent of the increase.

“It’s extremely damaging to the entire economy and it’s gotten worse in the past few years,” said Michael Beckerman, president and chief executive officer of Internet Association, a trade group.

A study published in the Cornell Law Review showed NPE lawsuits cost the economy more than $29 billion in 2011.

Beckerman said patent trolls “come to you and say, ‘It’ll cost you $1 million to settle with us or $10 million to fight us. Why not give us a million bucks now and call it a day?’ It’s a business decision you have to make.”

CHEAPER TO SETTLE

According to Beckerman, patent trolls lose 85 percent of the time if a case goes to trial, but their business model is based on most companies agreeing to settle because it’s cheaper.

The Internet Association, along with the National Restaurant Association, National Retail Federation and Food Marketing Institute, is rolling out a 17-state ad campaign urging Congress to put an end to patent trolling abuse.

The campaign urges people to tell lawmakers to tighten the patent process and level the litigation playing field.

Just because an NPE sues doesn’€™t mean it’s a troll.

– Jon Fallon

“The way the system is set up now, trolls have nothing to lose. They have no skin in the game,” Beckerman said.

Not all NPEs are created evil, however. Many legitimately defend inventors and their patents from infringement.

“Just because an NPE sues doesn’t mean it’s a troll,” said Jon Fallon, a partner in the West Orange law firm Mandelbaum Salsberg, which represented Tumi. “There are a lot of NPEs that are acting with the best interests of the inventor in mind. The difference is that trolls have designed a business model that says, ‘We can sustain profitability through nuisance suits.’”

According to the countersuit brought by Tumi, ArrivalStar filed 340 patent infringement claims in the past seven years, and “hundreds of additional defendants have received threatening demands.”

It also noted that the settlement costs are less than the price of hiring an attorney, which encourages the companies to play “let’s make a deal.”

Fallon alleged it was a criminal enterprise under RICO statues and summed it up as nothing more than an extortion scheme — the first time such a defense had been used.

William McMahon, the Florida attorney who represents ArrivalStar, said the company is not a troll.

“The typical patent troll does not send out pre-suit notice letters,” he said. “The typical patent troll holds one to three patents: ArrivalStar holds 32. Typical patent trolls are third parties unrelated to the inventor. The inventor is intimately involved in the licensing operation. We’re talking about infringement the owner has seen.”

Patent trolls often buy a patent from a company that is looking to sell some of its resources for cash. They then troll the internet, looking for companies potentially infringing on the patent.

According to McMahon, Martin K. Jones, the owner of ArrivalStar and Melvino Technologies, spent 26 years and millions of dollars to patent technology that can track vehicles such as buses and trucks.

Several years ago, ArrivalStar began suing metropolitan transit agencies and the Port Authority of New York and New Jersey, which post arrival and departure times on their websites for commuters. In 2011, it expanded its reach to retailers such as Tumi, and others that track shipping and customer deliveries online — which is nearly every company that sells products over the internet. L.L. Bean, Billabong and even Gatorade have been sued by ArrivalStar.

“Patent law states we can go after customers, suppliers, vendors, users,” McMahon said.

INVENTOR RIGHTS

“My job is to protect an individual inventor’s rights,” he said. “Any inventor who is not part of a large corporation and sues to protect his intellectual property is automatically labeled a troll and a shakedown artist, and that’s not right.”

PatentFreedom, a website that tracks patent litigation, charted 588 NPE-brought cases in 2004, and more than 4,600 in 2011.

“You can’t ignore them,” said Bob Marin, vice president and general counsel for Panasonic Corp. of North America. The Newark-based electronics giant has been sued nearly 70 times by NPEs since 2009, according to PatentFreedom.

“We have fought some of them, and fought successfully, and we’ve settled with some,” he said. “But that doesn’t stop them. There’s an endless flood of these patent trolls. It’s an epidemic for business. It just sucks the money out of everyone.”

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September 6, 2013 | ICYMI, News, Op-Eds

ICYMI- Editorial: Patent Trolls Sap Money, Time from Legitimate Businesses

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.

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September 4, 2013 | ICYMI, News

ICYMI- Anti-Patent Troll Campaign Targets Vermont

Vermont Digger
Anti-Patent Troll Campaign Targets Vermont
Posted SEP. 4, 2013, 7:45 PM

Vermont hardly stands out as a hotbed for so-called “patent trolls” compared to the rest of the country. But the state’s senior senator, governor and attorney general have made their voices heard in a national conversation that’s getting louder.

An anti-troll advertising campaign hit Vermont this week, urging residents and business owners to lobby for federal reforms preventing bogus patent infringement lawsuits. Patent trolls lay claim to overly broad patent rights and threaten businesses with lawsuits if they don’t pay exorbitant fees for alleged infringements. It’s often cheaper and easier for businesses to settle out of court, which generally just encourages the trolling behavior.

An advertisement by the Internet Association seeks support in the fight against "patent trolls." Courtesy image.

An advertisement by the Internet Association seeks support in the fight against “patent trolls.” Courtesy image.

The ads, scheduled to run through the end of the week in 15 states, are coordinated by the Internet Association working alongside the National Restaurant Association, the National Retail Association and the Food Marketing Institute.

The coalition reflects broader targeting by nonpracticing entities, the official name for those who wield patents rights without actually exercising the innovation behind the patents. Alleged patent rights include such ubiquitous functions as emailing scanned documents, placing a store locator application on a website, or doing just about anything “on a computer,” said Internet Association president and CEO Michael Beckerman.

Some firms acquire patent portfolios, for example, and make money solely by suing others for violating their patent rights. They collect money from people who either are frightened into payment or who know it’s cheaper to settle than prove themselves right.

Sen. Patrick Leahy’s role as chair of the U.S. Senate Judiciary Committee likely played a role in the organization’s choice to run ads in Vermont. Leahy co-authored the American Invents Act of 2011, a roster of patent reforms, with Rep. Lamar Smith, R-Texas. The pair also wrote intellectual property legislation known as Stop Online Piracy and Protect IP acts in 2011. (The latter measure failed to overcome a groundswell of popular opposition.)

The Internet Association’s Beckerman praised Leahy’s leadership and “clout” in the Senate and said Leahy has indicated his support for continued anti-trolling patent reforms. Beckerman is hoping that, with Leahy’s help, Vermont’s traction on fighting patent trolls will translate to the federal level.

“Vermont … has been a leader when it comes to stopping patent trolls,” Beckerman said. “State action is great, but we need to see legislation at the federal level.”

He’s referring to Vermont Attorney General William Sorrell’s lawsuit against MPHJ Technologies, filed earlier this year. It’s the first known case that takes a patent troll to task on the basis of consumer protection laws.

MPHJ has challenged the very premise of the suit, arguing it’s a federal patent law issue that should be tried in federal court. The case is now in U.S. District Court, where a judge may decide by the end of the year whether to keep the lawsuit as a federal case or send it back to Vermont courts as a state issue.

Meanwhile, Gov. Peter Shumlin and Vermont legislators added another “quiver” to Sorrell’s arsenal with the signing of H.299. The bill makes a civil offense out of bad-faith assertions of patent infringement and allows victims to seek actual and punitive damages for their troubles. The idea is to discourage bogus lawsuits by threatening legal action against patent trolls.

Vermont’s new law, unique in the nation, matches the goals of the Internet Association members and their counterparts in the tech world, the Application Developers Alliance.

“We want to interrupt and eliminate the business model of trolling,” said Alliance president Jon Potter. “The frightening part of trolling is that it’s a successful business model.” Without potential repercussions, he said, there is little to dissuade a patent troll.

A federal Government Accountability Office report, released in August, estimated that fighting patent trolls can cost up to $5 million in court and legal fees alone. A study by Boston University professors estimated that patent trolling took a $29 billion toll on American business in direct legal costs — a figure that jumps to $80 billion when extrapolated to include the indirect costs of opportunity loss from that diversion of capital.

Soon after the Internet Association’s ad campaign draws to a close, the Application Developers Alliance will wrap up a 15-city tour in Washington, D.C.

The event’s timing coincides with the two-year anniversary of Leahy’s American Invents Act. Potter said about 15 businesses are scheduled to attend to share their stories with congressional members.

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Top Internet Business Leaders Confirmed To Speak At Internet Association’s Third Annual Virtuous Circle Summit BECKERMAN: “The value of the Virtuous Circle Summit is the conversations that take place when you bring together the leading voices in the internet innovation and policy space.” Washington, DC — Today, Internet Association announced its initial list of confirmed speakers Read more »

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