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OP-ED | Patent Trolls Kill Economic Growth

by Tim Phelan | Mar 16, 2014 10:11pm
(2) Comments | Commenting has expired
Posted to: Business, Legal, Opinion

As the president of the Connecticut Retail Merchants Association, I advocate for businesses across the state. One of my jobs is to ensure that our elected officials are doing what they can to support economic growth.

Patent trolls are a serious threat to retail businesses all over the country and our representatives in Congress need to take action to protect those businesses. That’s why we’ve joined the Main Street Patent Coalition, along with our national counterparts and organizations from across the country, to speak out in favor of comprehensive patent reform.

Patent trolls are entities that threaten main street businesses with frivolous lawsuits over vaguely crafted or poorly worded patents. Usually, the patent troll wins a settlement because small businesses do not have the resources to fight it out in court. In fact, most trolls wouldn’t stand a chance to win and so they rely on scare tactics to extract a settlement. If the business does go to court, they end up spending money that could have been reinvested in their company. Our out-dated patent laws have created an environment ripe for this type of abuse.

Patent trolls are not a trivial problem.  Some estimates show that patent trolls have cost our economy $320 billion in the last five years. The White House has estimated that patent trolls account for an incredible 62 percent of all patent litigation. Who is footing that bill?  Main street businesses like those I represent. All of that money could be used to add jobs or reinvest in new technologies.  Instead, it amounts to a tax on business that is simply not sustainable.

Congress should reform our patent laws now to stop the abuse of the system that is harming so many of our main street businesses. Large organizations across the country, like the National Retail Federation, the National Grocers Association and the Retail Industry Leaders Association, have come together to form the Main Street Coalition to ask elected officials to do just that. Comprehensive patent reform should include five key elements:

• Transparency must be improved by eliminating a troll’s ability to hide behind multiple shell companies.
• Legislation must expand inexpensive review opportunities for unwisely-issued patents.
• Reform should make it easier to punish trolls that send fraudulent and abusive demand letters in an effort to shakedown victims.
• End users should be protected from lawsuits based on infringements by intermediary manufacturers and producers.
• Reform should address the costs of litigation by forcing trolls to pay when they sue companies frivolously.

Don’t be fooled into thinking that this is a small issue. Chances are you know a business that has been the victim of a patent troll or you are the customer of one. If Congress acts wisely and quickly, we can protect our main street businesses from falling victim in the future and help our economic recovery in the process.

Tim Phelan is president of the Connecticut Retail Merchants Association

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(2) Comments

posted by: GBear423 | March 17, 2014  6:49am

GBear423

Perhaps another avenue would be some accounting of the Judicial Branch. This Branch seems to have little accountability in the area of frivolous lawsuits, i am only a citizen expressing a layman’s opinion.  It seems that the spirit of the Law has been trumped by loopholes in the letter of the Law. Our Laws have become so complicated that the layman citizen can not make sense of it. Is that not how People are repressed? Perhaps some common sense can be applied to reforming the Law and its application, and perhaps these “Trolls” may be banished from Court.

posted by: JusticePartyCT | March 22, 2014  10:36am

Tim, thank you for bringing up this issue. Our patent laws need reform but most people don’t have it on their radar. Innovation and competition are what drive our economic engine. The patent laws are a mess. Some proposed laws can be found here. Carlos Camacho, State Coordinator, Justice Party Connecticut (www.justicepartyct.org)