Stop Patent Abuse
Learn about the problem
THE PROBLEM WITH TROLLS
The problem of patent trolls is getting worse. Trolls are sending out more threatening letters than ever before to a wider range of targets. It’s not just tech companies and software developers anymore – coffee shops, hotels and other main street businesses are now in the trolls’ crosshairs.
Fortunately, momentum is building to stop them. Businesses and trade associations across a variety of sectors, from restaurants and grocery stores to independent retailers and the biggest Internet companies are all working together to urge Congress to act. Our calls are being heard. President Obama has taken executive action to make sure the patent system is promoting real innovation and deterring abusive patent litigation, and he has called on Congress to act. Just two years after patent reform legislation passed Congress, bipartisan bills introduced in both the House and the Senate to stop the trolls are gaining momentum.
Continued advocacy by the broad coalition of businesses affected by patent trolls could be the difference in passing legislation to stop the trolls. We hope you will spread the message to friends and allies that trolls are bad for business, bad for jobs, bad for Main Street and bad for innovation. They must be stopped.
WHAT IS A PATENT TROLL?
Patent Assertion Entities (PAE) or “patent trolls” place a real drag on U.S. innovation and job creation. They are entities that buy patents and launch lawsuits, but do not create or sell anything.
Trolls use the threat of costly, drawn-out patent litigation to force businesses to pay them license or settlement fees instead of risking crushing legal bills and potential damage awards. Sometimes the trolls even go after businesses’ customers.
RISE OF THE PATENT TROLLS
The number of troll suits and the costs they impose are increasing at an alarming rate. In 2012, patent trolls were responsible for the majority of all patent litigation in the U.S. Last year, patent trolls filed over 5,000 lawsuits against productive companies, a four-fold increase in just seven years.
Targeting Main Street & the Internet Economy
Today, abuse of the broken patent litigation system by trolls affects everyone.
A threat once confined to large high-tech businesses is now also impacting U.S. Main Street. Small and medium-sized companies are the most frequent patent troll targets because they cannot afford to fight back.
Patent trolls prey on small software start-ups, hotels, airline companies, restaurants, retailers and mom-and-pop shops. In fact, half of the companies targeted by trolls are not in the technology industry, and the majority are small businesses.
When patent trolls sue non-tech and small companies, they usually assert business method patents. We’re seeing businesses, municipalities, and even charities sued for processing gift card transactions, enabling online shopping, and other standard business practices of e-commerce.
When trolls are taken to court over these types of patents, they lose 85% of the time. But the cost of challenging in court is too high for most businesses to fight back, encouraging trolls to simply threaten litigation to make money.
THE COST OF PATENT ABUSE
Patent litigation is extremely expensive: an average litigation costs a small or medium business $1.75 million. Many patent cases cost $5 million to litigate.
In 2011, troll suits cost American companies $80 billion, which includes $29 billion in direct payouts benefitting lawyers and not inventors. Only one-quarter of direct payouts collected go back into funding innovative activity.