Senate Attempts to Root Out Patent Trolls

by Jeff Wiener on November 12, 2013

It looks like patent trolls may soon need to find another bridge to lurk under, as late last week a Senate subcommittee began investigating the contentious issue of patent assertion entities (PAE), companies who are better known in the tech industry as patent trolls, those whose sole purpose is to profit off protecting their intellectual property.

Under the auspices of the President, The Senate Subcommittee on Consumer Protection, Product Safety and Insurance heard testimony from both advocates and critics of the current patent protection system in advance of a decision on whether to legislate greater protection for companies receiving threatening (and not to mention vague) patent infringement notices from these entities, as complaints about PAE practices have sky-rocketed over the past few years.

As a testament to the practices of these patent assertion entities, witnesses testifying before the subcommittee submitted letters from PAEs claiming patent infringement, letters that were consistently vague yet threatening, claiming infringement on everything from Wi-Fi to online shopping carts.

“These demand letters are often vague, lacking basic detail of what the recipient does to allegedly infringe the patent at issue,” Julie Samuels, a senior staff attorney at the Electric Frontier Foundation, said in her testimony. “The letters frequently list patent numbers without detailing which parts of the patent — which typically comprises many pages of dense technical content and legalese — are at issue.”

Another witness, Mark Chandler, general counsel at Cisco Systems, went so far as to call some PAEs “charlatans, dressed up as innovators.” This is “all about fraud,” said witness Jon Bruning, attorney general inNebraska. “This is about extortion. This is about fear.”

For many larger companies patent trolls are nothing more than a minor nuisance, if a  nuisance at all, as PAEs tend to avoid the bigger fish in the tech market. The real victims of patent trolls are small and medium businesses, those who are significantly more vulnerable and who lack the resources to fight back or shrug off such patent infringement allegations.

In fact, the worst part of the story is that the companies who are often the primary targets for patent infringement litigation of this sort are the start-ups, the small companies working hard to innovate and advance our technological paradigm, the ones who simply don’t have the resources to fight back.

While the Senate subcommittee certainly won’t remove the ability of patent trolls to defend their intellectual property, what the committee is looking to do is set some guidelines regarding the specificity of the claim. No more vague threats, in fact, seems to be the order of the day, as the accusers will have to have to list the patents and products in question, as well as detail the alleged infringement.

Further, the subcommittee is mulling over a ‘loser pays’ rule, whereby the loser of the suit would have to cover the legal costs of the winner. This is meant to curb the tactics of patent trolls to threaten legal action and hope for a settlement from companies who can’t afford legal costs. If the accusation is baseless, let them take you to court as they’ll be paying your legal bills when they lose. But of course this ‘loser-pays’ mentality could have far reaching effects, preventing companies from legitimately defending their intellectual property out of fear that they might lose and not have the funds to pay the legal costs.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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