Patent assertion entities (PAEs), widely known as patent trolls, are wreaking havoc on the U.S. economy. Lawsuits brought by trolls have quadrupled since 2005 and now account for 60% of all patent litigation.
These days, patent trolls are targeting business of all sizes and in all fields. They’ve moved from suing big tech companies, to innovative app developers and startups, and now are attacking Main Street brick-and-mortar businesses. It is not going unnoticed. Policymakers at the White House, in Congress, and at the Federal Trade Commission have proposed ways to stem the tide of abusive lawsuits.
Many of the proposals focus on deterring patent trolls from bringing frivolous cases. We support many of those proposals, including shifting attorneys’ fees to the losing party in such suits, leveling the playing field between the parties and discouraging abusive behavior. However, litigation reforms do not provide a complete solution.
Many trolls thrive because of low-quality patents in the system—particularly “business method” patents that claim ownership of commonplace ideas performed on a computer or the Internet. Trolls use business method patents to file frivolous suits over things like promoting discounts or chatting with customers online. Such patents are used in litigation nine times more often than other kinds of patents.
Trolls know it rarely makes sense for companies to spend several years and millions of dollars trying to invalidate a bad patent through litigation. This way, trolls make money by simply threatening litigation, regardless of the merits of their case or the validity of their patents. We must give companies another tool to weed out invalid business method patents.
Today, a broad group of 44 companies — including our members, supermarkets, retailers, energy companies and others — sent a letter to Congressional leaders calling for an expansion of the U.S. Patent Office’s covered business method (CBM) program. The CBM program is a cheaper, faster alternative to litigation for companies looking to challenge dubious business method patents.
Yet the CBM program is currently restricted to finance-related business methods. Broadening it to all business method patents would strengthen its effectiveness by providing “a targeted ‘surgical strike’ against the worst of these frequently abused patents.”
As Congress and others work to address the troll litigation explosion, it’s important that we remember what’s fueling the fire: low-quality patents. Expanding the CBM program will make it easier to reexamine the bad patents already out there, giving businesses both a tool to take on the trolls and the certainty they need to keep innovating.
