Profit Minded

Bill seeks to kill the (patent) trolls that plague tech startups

For technology startups, there is a worse breed of troll than the one that posts nasty comments at the end of Yahoo articles. “Patent trolls”—people and organizations that make their livelihood collecting licensing fees or settlements by filing patent infringement lawsuits—are considered increasingly problematic to business and innovation in the U.S.

As the Washington Post noted recently, “When you're targeted by a patent troll, the rational thing to do is to capitulate. Defending a patent infringement lawsuit can cost millions of dollars, and trolls carefully calibrate their settlement demands so that it will always cost more to fight than to settle.”

“Any company that uses technology in its products or services today faces a steadily increasing threat of patent litigation,” according to RPX Corporation. The company, which attempts to reduce patent headaches for its clients, says legal threats cost operating companies some $11 billion per year. The fact that some patent-troll defendants have invoked the Racketeer Influenced and Corrupt Organization Act points to the similarities between trolling and extortion.

This week House Judiciary Committee Chairman Bob Goodlatte (R-VA) introduced a bill that has bipartisan support to do something about the problem. The Innovation Act of 2013 is an amendment to the America Invents Act, passed last Congress, addressing certain abusive litigation practices.

The Electronic Frontier Foundation calls the legislation “the best patent-troll killing bill yet.” In a post on its website, EFF declares, “We support the bill because it offers a host of fixes to the growing patent-troll problem. Taken together, these reforms will help stop the abusive patent litigation that has targeted everyone from grocery stores to podcasters.”

Goodlatte calls patent trolling a drag on the economy. “Everyone from independent inventors, to startups, to mid- and large-sized businesses face this constant threat,” he said in a statement.

A timely example is the case of FindTheBest, a startup consumer research website that made headlines last month when it went public about a lawsuit threat from patent-holding company Lumen View Technology. Ars Technica reports that Lumen View was looking for “a quick $50,000 payout for its patent on ‘multilateral decision making’," but found a fight on its hands when FindTheBest CEO Kevin O’Connor decided to put up $1 million of personal wealth to defend his startup—he sold his previous company, DoubleClick, to Google for $3.1 billion five years ago—instead of settling.

The case bolsters Goodlatte’s argument that “the tens of billions of dollars spent on settlements and litigation expenses associated with abusive patent suits represent truly wasted capital … that could have been used to create new jobs, fund R&D, and create new innovations and technologies.”

By eliminating patent system abuses, discouraging frivolous litigation, and keeping U.S. patent laws up to date, Goodlatte says his proposed changes to the law would “help fuel the engine of American innovation and creativity, creating new jobs and growing our economy.”

Loading...

Popular Blog Posts

Friend's Activity