By Main Street Patent Coalition
The 113th Congress, along with the few before it, has seldom been described as cooperative or unified. One issue, however, is defying the odds: patent reform. Patent reform is uniting Members of Congress to prevent the continued annual drain of $29 billion on American businesses directly, and more than $80 billion in indirect costs as businesses have to divert resources or delay new products at the hands of patent trolls. Bolstered by support from industries not normally weighing in on patent policy, it looks like this Congress can carry out reforms to protect businesses from the threat of patent trolls and they can do it swiftly.
Patent trolls or patent assertion entities (PAEs) are firms that buy rights to low quality patents in order to target small and medium sized companies with licensing lawsuits. Lately they’ve taken to targeting end users of common technologies like Wi-Fi, store locators and other products used by retail stores, hotels, restaurants, printing companies and more – none of which produce or manufacture the infringing product.
Patent trolls do not provide goods or services, but instead make a profit preying on businesses that do. Simply put, they effectively pull much needed resources out of our growing economy. Small business owners are creative, bright and entrepreneurial; however few have a law degree or the expertise to fight these suits. Most are required to retain outside council, which is not cheap when the average litigation costs $2 million. As one can assume, this is not a cost that many small-medium sized businesses can afford, so they’re forced to wave the white flag and pay the licensing fee.
The need for patent reform is urgent for Main Street and the issue has united politicians on both sides of the aisle like few issues have in recent times. The House passed patent reform legislation last year and now there are a number of bills introduced in the Senate. In order to stop this problem, members of Congress, advocacy groups and business interests are calling on Congress (1) Improve transparency and make it harder for PAEs to hide behind shell corporations; (2) improve patent quality, creating a path at the Patent Office to fight bad patents; (3) make it easier to punish patent trolls that send fraudulent and abusive demand letters; (4) protect end users from troll lawsuits based on infringements by intermediary manufacturers and producers; and (5) make trolls pay legal fees when they sue companies frivolously.
However it shakes out, legislation has to give main street businesses a fighting chance to challenge patent claims.
The bipartisan support for this increasingly important issue is an indication of the span of industries impacted and the urgency with which our recovering economy will rely on reforms. Congress should pass patent reform immediately, and get small businesses across the country back to what they do best: investing, hiring and continuing to be the engine that drives our great economy.
Main Street businesses are teaming up to make sure their voices are heard loud and clear on patent reforms. To find out more and read real life stories of patent troll victims visit mainstreetpatents.org
Main Street Patent Coalition Members
National Retail Federation
National Restaurant Association
American Bankers Association
Printing Industries of America
American Gaming Association
Application Developers Alliance
American Hotel and Lodging Association
Credit Union National Association
Direct Marketing Association
Food Marketing Institute
Independent Community Bankers of America®
International Franchise Association
National Association of Realtors
National Council of Chain Restaurants
National Grocers Association
Retail Industry Leaders Association
The Latino Coalition
American Association of Advertising Agencies
The Emob (online retailers)
U.S. Travel Association
Small Business Majority