Patent troll protection needed for businesses

The Gazette Opinion Staff
Published: March 10 2014 | 12:01 am - Updated: 1 April 2014 | 9:21 am in

By Jessica Dunker and Jim Henter

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In recent conversations with Iowa business owners, the topic of “trolls” has come up again and again. These trolls are no joke — they have cost our economy half a trillion dollars over the last 20 years, $320 billion of that in the last five years alone.

The trolls Iowa businesses are concerned about are all too real: so-called “patent trolls” that threaten main street businesses using vague or poorly worded patents. These companies cripple our economy, costing us jobs and putting a tax on small main street businesses.

Patent trolls operate in the shadows of our economy. These companies (more politely referred to as “patent assertion entities”) do not make or produce anything. Rather than developing anything of their own, these trolls purchase broad or vaguely worded patents and use them to attack main street businesses around the country.

The trolls do not usually stand a chance in court — instead, they bank on the fact that their targets will not be able to fight back. Most companies sued by patent trolls have annual revenues of under $10 million. For these main street companies, it is usually less expensive to settle with a troll than face the legal costs of fighting in court.

Over the past decade, lawsuits filed by patent trolls have exploded. In 2006, these lawsuits accounted for less than 20 percent of all patent litigation. Today, troll cases represent the majority of all patent lawsuits in the country. Collectively, these lawsuits add up to a damaging tax on small businesses. When main street companies are forced to settle with patent trolls, they face serious economic consequences. They may be forced to delay a planned expansion, lay off workers, or be put out of business altogether.

Congress must act now to stop patent troll abuse by passing comprehensive patent reform legislation. Groups of businesses like ours — the Iowa Retail Federation and the Iowa Restaurant Association, as well are our national counterparts — are calling on Congress to pass such reform.

Any successful legislation will incorporate five key reforms: improving patent quality; eliminating trolls’ ability to hide behind multiple shell corporations; making it easier to punish trolls that send fraudulent and abusive shakedown demand letters; requiring that trolls sue the party responsible for alleged infringement, not end users who had no input in the product development; and making trolls pay when they sue companies frivolously.

We have seen over the last decade that these trolls are willing to go after anyone: local coffee shops, small town employment agencies, and regional grocery stores — our main street businesses — have all been targeted by patent trolls in the last year.

Our main street businesses need Congress to stand up for them and pass comprehensive patent troll reform now.

Jessica Dunker, president/CEO, Iowa Restaurant Association, and Jim Henter, president, Iowa Retail Federation. Comments: jdunker@restaurantiowa.com or jhenter@iaretail.org

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