Trade groups wage war on patent trolls

A print and radio advertising campaign launched recently in Ohio seeks to raise public awareness about the costly problem of frivolous patent litigation and urges residents to demand action from federal lawmakers to address it.

Some groups — pejoratively referred to as “patent trolls” — use lawsuits or the threat of litigation to obtain sizable payments from businesses and nonprofits for sometimes questionable patent infringement.

Patent trolls cost the U.S. economy $80 billion annually, and abusive patent activities are financially harming small businesses and start-ups and stifling innovation, according to the ad campaign.

Patent litigation is on the rise nationwide, and some groups claim too many of the lawsuits lack merit but result in payments or settlements because litigants understand how to exploit loopholes in patent law for financial gain.

“This is one of the most damaging things hurting our economy right now,” said Michael Beckerman, president and CEO of the Internet Association, which was one group behind the ad campaign and represents some of the world’s largest web companies.

Some Ohio businesses have been threatened with litigation or sued for patent infringement by groups that make questionable patent claims.

An Ohio business last fall received a letter threatening possible legal action if the company used basic copier equipment that allows scanned documents to be attached to an e-mail through a local computer network, according to an Aug. 5 Dayton Daily News article.

The technology described in the letter is commonplace and has been available for years, industry experts said.

But a Delaware company called DucPla said the Ohio business and others across the state that use such copiers need to pay $1,200 or more for each of their employees or else risk legal action for patent infringement.

Some patent claims are clearly absurd and would not withstand a legal challenge, but paying to defend against a patent lawsuit can be extremely expensive, and patent trolls often use this fact to derive settlements or licensing fees from companies that cannot afford a legal battle, Beckerman said.

“It’s a legalized form of extortion,” he said. “Just because it’s legal doesn’t mean it’s right, and this is something Congress needs to address immediately because it is hurting jobs in every sector of the economy in every single state and town across America.”

In late August, the Internet Association, the National Restaurant Association, the National Retail Federation and the Food Marketing Institute kicked off the “Stop Bad Patents” radio and print advertising campaign.

The trade groups said they want Congress to enact new laws that shift court costs to the patent trolls if they lose frivolous lawsuits.

The trade groups also call for more scrutiny of patent claims before a patent infringement case heads into the discovery phase, which is when legal expenses can mount up.

Elected officials from both political parties have criticized patent troll activities and some have introduced legislation that seeks to curb abusive practices.

But some patent experts said they fear lawmakers will overhaul the otherwise effective patent system simply because of the actions of a few unscrupulous parties.

They said the patent system is designed to protect inventors and promote innovation, and changing the law could make it harder for them to capitalize and monetize their intellectual property.

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