SUPPORT FOR STOPPING TROLLS?
By MICHAEL BECKERMAN / For the Orange County Register
There were a total of 121,247 patent grants issued from January 2011 to December 2011, according to the U.S. Patent and Trademark Office.
It seems impossible these days to find an issue that brings together members from both the Democratic and Republican sides of the aisle. In a rare exception to this rule, last month Republican Rep. Darrell Issa and Democratic Rep. Judy Chu introduced bipartisan legislation to help businesses here in California and across the country better protect themselves from patent trolls seeking to exploit and profit off of others’ ideas.
A transparent and effective intellectual property system that enables those who invest in research and development to recoup their investments is essential to fostering innovation.
Each year, the Internet Association’s members invest millions of dollars, driving the development of new technologies and societal freedoms through their creativity and innovation, and they rely on IP to protect their investments. But patent trolls do not create or sell anything. They are companies that exist solely to threaten and intimidate other businesses for their own financial gain.
Trolls use the threat of costly, drawn-out litigation to force businesses to pay them licensing fees, arguing that the companies have infringed on their patents. By relying on overly-broad business method patents – for things as common as online store locators and emails that track package delivery – they target all kinds of businesses from all kinds of industry. No one is safe, not the mom-and-pop shops or the multi-national corporations.
The way these patent trolls operate is underhanded and greedy – hence the label. They base many of their claims on patents of business methods, rather than specific products because they are often overly broad and largely invalid. When trolls are taken to court over these types of patents, they lose 85 percent of the time. But the cost of challenging in court is too high for most businesses to fight back.
The cost to our economy is staggering. In 2011, productive businesses made direct payments to patent trolls of $29 billion, and when legal fees and other indirect costs are factored in, the total cost rises to $80 billion.
This problem is getting worse. Patent troll cases have increased fourfold since just 2005, making trolls responsible for a majority of all patent litigation in the United States. And a majority of the companies targeted by patent trolls are small businesses, like coffee shops and main street retailers.
The bill introduced by Reps. Issa and Chu, the STOP Act, gives companies a faster, cheaper alternative to litigation by allowing them to challenge patent validity at the U.S. Patent and Trademark Office instead of in court. And once a patent is proved to be invalid, the troll won’t be able to threaten other businesses.
The STOP Act also contains safeguards to protect legitimate patent holders. Specifically, the Patent Office will institute a review only if it determines that the patent is “more likely than not” invalid.
As Congress considers this legislation, it should also look at the cause of the problem: bad patents. For our economy to grow, we need to give companies the tools to fight patent trolls and stop bad patents from being issued in the first place.
Giving companies new tools to take on the trolls is an important first step, and one that Congress should act on now. With support from the White House, and a companion bill in the Senate, the STOP Act could become law, giving California’s businesses a welcome boost.