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Press Release: Broad New Patent Reform Coalition Launches, Committed to Ending Patent Troll Abuses

WASHINGTON – Many of the diverse groups, industries, and companies supporting patent reform over the last decade today announced they have united into a single, large coalition and coalesced around a set of core principles aimed at reining in the abuses patent trolls wreak on businesses, job growth, innovation, and our economy.

“Instead of creating new jobs and investing in new technologies, businesses large and small across many industries—from national realty, construction, and technology businesses to Main Street retail shops, hotels, grocers, convenience stores, and restaurants—continue to be forced to divert scarce resources to fighting frivolous lawsuits and overly broad claims made by Patent Assertion Entities, or ‘patent trolls,’” said Matthew Shay, president and CEO of the National Retail Federation. “This must change.”

Despite passage of the America Invents Act and several recent positive rulings from the Supreme Court, abuse of our patent system continues unabated. United for Patent Reform does not intend to achieve incremental victories or invalidate specific types of patents, but to take back a patent system increasingly held hostage by patent trolls and return it to its original purpose: fostering innovation and investment that benefits the entire American economy. This morning, the broad new coalition sent a letter to Leaders in Congress and Members of the Judiciary Committees in the US House and Senate outlining the principles strong patent reform legislation should include. 

“Patent trolls have turned everyday business practices, like using a scanner-copier, into potential lawsuits,” said Chris Polychron, president of the National Association of Realtors®. “Every industry, including real estate, is currently vulnerable to intimidation by patent trolls who use the threat of costly litigation to extract unwarranted ‘hold up’ settlements from companies that unknowingly use the products that trolls allege might infringe their patents. From large settlements to individual demand letters, patent trolls cause Realtors® to divert resources away from job creation and investment in new technologies that enhance the real estate experience.”

With today’s announcement, United for Patent Reform becomes the preeminent national voice for the strongest possible patent litigation reform legislation. Its members include the National Retail Federation, the American Hotel and Lodging Association, the National Association of Realtors®, the National Restaurant Association, the National Association of Home Builders, the Coalition for Patent Fairness and many of its member companies Google, Oracle, Cisco, Verizon, Salesforce.com, Adobe, Intuit, and Dell—as well as JCPenney, SAS, the Retail Industry Leaders Association, Macy’s, Facebook, the Food Marketing Institute, Amazon, the National Association of Convenience Stores, the National Association of Chain Restaurants and several others who are still in the process of joining at this date of announcement.

Part of the new coalition’s strength comes from the collective commitment in supporting the following seven legislative measures:

  • Reform Abusive Demand Letters: Require that patent demand letters include truthful, basic information. Patent trolls send vague and deceptive letters alleging patent infringement to demand unjustified payments from innocent individuals and businesses. Vague demand letters should not be used to bully innocent businesses into paying what amounts to protection money.
  • Make Trolls Explain Their Claims: Require patent owners to explain in detail the basis for the alleged infringement when they file a complaint. Current law does not require that a patent holder explain how a patent is infringed, or even identify the product involved, which makes it nearly impossible for someone who has been sued to evaluate the case and decide how to proceed.
  • Protect Innocent Customers: Ensure that claims between a patent owner and a manufacturer proceed before claims between the patent owner and the manufacturer’s end users. Under current law, anyone can be sued for infringement for simply using a product, system or method.  We don’t want to change that.  Instead, it simply makes sense for cases against end users to be stayed in favor of cases involving the manufacturer.
  • Make Patent Litigation More Efficient: Make patent litigation more efficient so that weak cases can be dismissed before expensive discovery. Requiring patentees to explain and judges to decide what a patent means at the beginning of a case—the Markman hearing—narrows the case to the actual legal issues in question, drives early resolutions, and avoids unnecessary and expensive discovery.
  • Stop Discovery Abuses: Require trolls to pay for the discovery they request beyond core documents so that they cannot run up costs just to force a settlement. Since trolls don’t actually make or create anything, they have few documents to produce and no incentive to be reasonable in their discovery requests. Making trolls responsible for the costs of their discovery requests that go beyond the core documents needed to decide most patent issues will stop unreasonable demands made for negotiation leverage.
  • Make Abusive Trolls Pay: Require that a losing party who brings a frivolous case pay the other side’s attorney’s fees—and make sure the troll can pay. Trolls currently have few barriers to litigation with no significant costs. A stronger presumptive fee-shifting statute and a mechanism to ensure court ordered fee shifting is enforceable will deter nuisance suits.
  • Provide Less Expensive Alternatives: Maintain and improve administrative alternatives to litigation. Ensuring access to efficient and fair mechanisms to re-examine questionable patents, by among other things not watering down the PTO’s existing standards, will reduce litigation abuses and strengthen the patent system.

“Parties across the political and economic spectrum agree that the problems caused by patent trolls and abusive patent litigation must be addressed. President Obama has spoken out forcefully against patent trolls,” said NRF’s Matthew Shay. “Democrats and Republicans in the House of Representatives joined together to pass the Innovation Act by an overwhelming bipartisan vote of 325–91. Although the Innovation Act could have done even more to prevent abusive patent litigation, it was an excellent start. The urgent need for comprehensive change has not lessened since the House passed the bill 13 months ago. Although the Supreme Court heard an unprecedented number of patent cases last term—a testament to the fact that our patent system needs reform—those decisions have not deterred the abusive strategies employed by patent trolls who continue to exploit the patent system. Moreover, although the courts can alter their understanding or interpretation of the patent laws, only Congress has the authority to change those laws. Now is the time for them to do so.”

 

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