Michael Beckerman and Paul DeRoche: Congress should act now to stop patent trolls
Posted: 10/28/2013 01:00 AM
If you’ve heard about patent trolls, you already know that they hurt businesses, drive up prices for consumers and are a drain on our economy to the tune of $80 billion annually. What you may not know is that they are no longer limiting their targets to software developers and high-tech companies. Now the trolls are shaking down every type of business, from retailers and restaurants to major corporations and even charities. But by broadening their targets, they’ve sparked momentum for reform to put a stop to their abusive practices.
They’ve even taken aim at local banks, grocers and retailers. These companies, which employ thousands of Rhode Islanders, were sued for the use of common e-commerce tools and customer loyalty programs. The money that these businesses have to spend to defend themselves in court is money they can’t spend hiring more workers and funding innovation. But that’s just a glimpse of how large the troll problem has become.
Businesses targeted by patent trolls are left with two very expensive choices. For small and medium-sized businesses, the average cost of paying the troll a licensing fee is about $1.3 million dollars. For those same small and medium-sized businesses, the average cost of going to court is $1.75 million. So it’s no wonder that many choose to pay the trolls rather than fighting them in court.
Trolls make their living by taking advantage of overly-broad, low-quality patents. These often cover everyday business practices like having an online store locator on a website or providing wifi to customers in coffee shops, and many should be invalid. The proof is that when cases based on alleged infringement of these business-method patents are tried in court, the trolls lose 85 percent of the time.
According to the White House, trolls sent out more than 100,000 demand letters last year. And it’s adding up to real money for them, and a significant drain on our economy.
As the extent of this problem has become clear, policymakers are taking notice. Some states have taken action to stop the trolls, but because our patent system is under federal jurisdiction, an effective, comprehensive solution must come from Congress.
Already, a number of bills have been introduced to address this issue in both the House and Senate, and from Democrats and Republicans alike. Additionally, President Obama has urged Congress to make a number of changes to our patent system to stop the trolls.
To be effective, reform must accomplish two goals. First, it must make sure that both parties have something at stake, which will change the trolls’ calculus and reduce the number of suits that ultimately go to court. Second, reform must make it easier to invalidate low-quality patents that enable abuse. Allowing targets of business-method patents to challenge the validity of the patents at the Patent and Trademark Office instead of in court would give victims of patent abuse a less costly and more efficient way to fight back.
Rhode Island businesses can’t afford to wait any longer for reform to stop these patent trolls. We urge members of Congress, and particularly those on the relevant committees of jurisdiction such as Sen. Sheldon Whitehouse (D-R.I.), to act with all deliberate speed to pass reforms that stops patent abuse once and for all.