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Patent trolls: Congress gets down to business

Steven Titch | Feb. 11, 2015
White Castle might not be the first company that comes to mind when high tech is mentioned, but the restaurant chain found itself in the middle of the patent troll controversy when it started sending menu updates from its headquarters to digital screens in restaurants around the country.

White Castle might not be the first company that comes to mind when high tech is mentioned, but the restaurant chain found itself in the middle of the patent troll controversy when it started sending menu updates from its headquarters to digital screens in restaurants around the country. 

"We received a letter basically demanding payment not for the technology in the board itself but the process of our sending the information out to the menu boards," Jamie Richardson, the vice president of corporate relations at White Castle, told Legal Newsline. "We don't have the global resources that some companies do. So it's really slowed us down. We're definitely a lot more reluctant to try new technology."  

It was another example of how bold patent trolls, or patent assertion entities (PAE), have become.

The White Castle case illustrates how PAEs, which exist only to stockpile patents and sue anyone who might come close matching the concept, are not just targeting a handful of powerful Silicon Valley corporations. These days any enterprise that employs any new technology — even if it's as common as digital signage — risks a dreaded cease-and-desist letter.

Research by an MIT economist found that, during the study period, sales of imaging software had declined by one-third relative to other medical imaging products. The study determined it was patent litigation, not a general slowdown in hospital demand, that was behind the drop.

All this is perhaps why, despite the ultra-partisan atmosphere in Washington, lawmakers are building bipartisan consensus to address the issue. In the House, Rep. Bob Goodlatte (R-Va.) introduced the latest round of patent reform legislation last week.

Goodlatte's bill is expected to have provisions that aim to force patent trolls, if they lose a frivolous lawsuit, to pay defendants' legal fees; limit the scope of discovery so that targets don't drown in expensive and time-consuming requests; and require plaintiffs to be more specific in their infringement charges. 

Meanwhile, the Senate plans to introduce a similar bill in the first few months, according to Senate Minority Whip John Cornyn (R-Texas). President Barack Obama has also lent his support through a series of executive orders that strengthened the U.S. Patent & Trade Office's ability to deal with the often arcane language in technology and software patents. 

These actions can go far toward curtailing traditional patent trolling, but as policymakers in D.C. move forward, they should also consider the many faces of patent trolling, some of which you may already know. Here are two that I address in my new Heartland Institute white paper, "Why Patent Reforms Are Needed: Intellectual Property Abuses Threaten Innovation and Cost Consumers Billions": 

 

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