As if the stresses of COVID weren’t already enough for American businesses trying to recover, now, businesses are suffering a resurgence of bottom-feeders known as “Patent Trolls.”
Yes, American businesses are all recovering, coping with the loss of staff, supply chain issues, inflation, return-to-office vs. fully-remote-work debates, and many other challenges.
These challenges create enough of an uphill climb to keep the momentum of the economy moving forward without these ugly beasts coming out of their caves.
Trolls siphon profits from hard-working business through bogus patent lawsuits. They target some of America’s most promising businesses—those that have innovations that can bring us back from the economic harm inflicted during the pandemic.
These Trolls, also known by the self-serving euphemistic name of “Non-Practicing Entities,” identify their business targets carefully, then strategically find some obscure patent, one that has barely a slim connection to some part of the promising business—a patent long-dormant, unprofitable, not developed ever, and they buy the patent rights for a song. Then the Troll sends an extortion letter from lap-dog lawyers to their targets, demanding millions for alleged “patent infringements.”
It is the threat itself that works.
In this country, defending against bogus claims of a patent infringement can cost more that the extortion demand.
Often companies that don’t pay find themselves litigating far from their homebase in Federal courts famous for leaning towards Trolls’ views, assisting them to get the verdicts they want. And local juries hand out the verdicts. Why?
Easy. In the areas surrounding these courts, whole towns and counties are largely dependent on the economics generated by these Trolls and their lawyers, and the jurors know it right down to their socks.
In these courts, it’s hard for a business defending against a Troll suit to count on fair trials.
Businesses attacked by Trolls quickly learn that the path to avoid spending millions in legal fees is to pay the Trolls their demands in quick settlements.
One notorious Troll example was an anonymous company that claimed to own a patent on the simple scan-to-email function. They sent out letters demanding $1,000 per worker from small businesses across the country insisting that they either pay up or be sued. Many paid rather than incur defense costs or risk unjust verdicts.
At a recent U.S. Senate hearing, it was Nebraska Attorney General Jon Bruning who called Trolls “bottom-feeders” and labeled Troll’s acts no different from “garden-variety extortion.”
As much as Trolls hurt the companies they target, American consumers are hurt worse—their pockets are being picked without their knowing it. Consumers ultimately shoulder the increased product costs. And at a time when inflation is reaching the highest point this country has experienced in 40 years.
In 2011 Congress did something about these monsters. It passed the American Invents Act (AIA). The AIA provided victim businesses a cost-effective way to challenge Trolls in the U.S. Patent and Trademark Office (USPTO) before the Trolls could drag their targets to their favorite courts.
In the wake of passage of the AIA, America saw a $3 billion surge in the GDP and the AIA process through the USPTO shouldered a large part of that increase as innovation thrived.
Unfortunately, the USPTO dropped the ball and let the Trolls get back in the game. Over time, the AIA process has weakened, making it harder for businesses to successfully challenge these Trolls.
More and more, the USPTO ignores valid actions against Trolls, and the Trolls are again climbing out of their holes where Congress sent them in 2011. They are again weaponizing invalid and questionable patents—to the tune of an estimated $29 billion in extortionate claims.
Lawyers and Trolls get rich. Businesses get poor—or shuttered. People are laid off. Useful tech gets flushed down the drain or goes overseas. American consumers suffer unawares.
As Trolls again begin to bilk Main Street, Congress is not sleeping. There is bipartisan legislation holding out promise of stopping the Trolls in their tracks.
Sen. John Cornyn (R-TX) and Sen. Patrick Leahy (D-VT) are sponsoring the Restoring the America Invents Act (RAIA). This bill closes gaps the USPTO has let grow that weaken the patent review process.
Congress needs to fix this silent killer of American businesses. Especially now. They fixed it in 2011, and now it needs to do it again. The RAIA will benefit Utah companies, and companies all over the U.S.
If Trolls succeed in stopping the RAIA, part of every dime of consumer purchases will again find its way into some Troll’s greasy pocket.
Passing the RAIA is the solution. It will send these Trolls and their lawyers back to where they were in 2011—and we can all get moving again in a great post-COVID recovery. Thank you Senators Cornyn and Leahy for doing something about Patent Trolls.
Jonathan Johnson is the CEO of Overstock.com.
