Day by day, the problem of patent trolls (more formally known as Patent Assertion Entities, or PAEs) grows, causing greater and greater angst amongst companies, associations, policymakers, and regulators.
Why are patent trolls such a widespread problem? Because these trolls game the patent system.
Patent trolls have become parasites on legitimate business. They buy up portfolios of technology patents that are overly broad, claiming ownership of everything from QR codes to WiFi to the Intelligent Mail® barcode (IMb™). Patent trolls aggressively pursue enforcement of these patents through demand letters that extort businesses to pay licensing fees based on vague and often misleading claims of infringement.
“Two lawsuits from patent trolls cost my Internet company more than $4 million to win – equivalent to 5% of this year’s revenue,” said former DMA Board Chairman and Return Path CEO Matt Blumberg in a recent Crain’s op-ed.
While some businesses choose to fight the trolls, not everyone has the resources to do so. Recipients of these letters include businesses of all types: retailers, restaurants, hotels – even your local independent coffee shop. Because these kinds of businesses don’t typically have a team of patent lawyers on staff, or the budget for a long and costly legal fight, they usually give in to the demand for a licensing fee. Put simply, it is often much more expensive to hire a lawyer to review or defend against a suspect claim than it is to pay the requested fee. Trolls count on it being cheaper for a business to give in than to fight back. Talk about legal extortion.
But, there is a glimmer of hope on the troll-riddled horizon.
This week, another of DMA’s long-time members scored an important win in the fight against patent trolls. “At GrayHair, we have been the last combatant standing in the mailing industry’s epic battle against a patent troll,” the company said in a statement. “After almost two years, we can now move forward in the use of the Intelligent Mail® barcode (IMb™) and can provide risk-free mail processing to our current and future clients.”
DMA congratulates its members for successfully fighting individual patent troll battles – and we’re doing everything we can to ensure that the good guys win the troll war.
Every day, DMA is working hard to battle PAEs and their abusive demand letters. DMA joined forces with several other trade associations to form the Stop Patent Abuse Now (SPAN) coalition. The coalition has been very active in helping members of Congress craft legislation to help alleviate and hopefully resolve the patent troll problem.
As a result, policymakers in Congress and the Federal Trade Commission (FTC) have ignited efforts to fight these abusive actors. In December, the House overwhelmingly passed the bipartisan and DMA-supported “Innovation Act,” which promotes patent litigation reform that would aim to curb the practices of patent trolls. The Senate has been hard at work on its own bipartisan proposal, which will be marked up some time in May. The FTC has also devoted resources towards fighting trolls: the Commission is currently pursuing a study that will investigate and provide evidence on the behavior of patent trolls. The FTC has opened a separate investigation and enforcement action against a known patent troll, MPHJ Technology Investments, as well.
Are you a troll warrior? Do you have patent trolls knocking at your door? Either way, knowledge is power. If you have a dog in the patent troll fight, make sure that DMA knows it, so that we can best defend the interests of our members and ensure that patent trolls go the way of the dinosaur.