I beat the patent trolls; so should the US Senate

When the U.S. Senate put patent reform on hold, I got angry. Here was another chance to pass some much-needed legislation, and our elected representatives were just throwing the opportunity away.

The debate about patent reform isn’t just about the wasteful lawsuits that cost the economy almost $80 billion a year (though if it was just about that, that’d be enough of a problem in my book).

For me and my co-workers, it’s personal. We’ve suffered the consequences of Congress’ inaction on a problem that burdens businesses, kills jobs, and discourages investment and innovation.

ADVERTISEMENT
A year ago, a “patent troll” – a shell company that exists mainly to sue other companies – filed a legal action against my business, the online research engine FindTheBest.

Their charge: FindTheBest had infringed on a patent that they held for “a system and method for facilitating bilateral and multilateral decision-making.”

If you think that sounds fishy, you’re right. Under their broad line of thinking, they could sue you for talking with your family and friends about where to go for dinner tonight.

FindTheBest wasn’t alone in being targeted by the patent troll that calls itself “Lumen View Technology.” Lumen View hit 19 other businesses with a similar complaint, each time offering to settle for about $50,000.

After initial outrage, one by one, these companies decided to settle. When you look at the economics, it’s clear that the cost of fighting back in court far exceed the cost of settling out of court. They were being smart businesspeople and making a smart business decision.

I just couldn’t get past the injustice of the whole thing. So, I personally pledged $1 million to take this out of the business realm and make it a personal fight. There’s one thing I love, and that’s innovation. And there’s one thing I really hate: injustice – people abusing the system.

So far, we’ve invested roughly $500,000 in legal fees, time and effort. That doesn’t count the psychological toll of sleepless nights and restless days devoted to fighting back.  These resources should be used on our business, not on a frivolous lawsuit with a troll who files lawsuits for a living.

Thankfully, last November, U.S. District Court Judge Denise Cote saw the injustice, ruling that Lumen View’s patent is invalid.

But the problem remains, because the good guys don’t always fight back – and understandably so.

The patent trolls have developed a business model that’s as successful as it is cynical: Buy up old patents, target companies – often new and innovative firms that are raising money -- and send these companies “demand letters” accusing them of infringing on a patent, and threaten them with lawsuits if they don’t pay up.

Rather than spend hundreds of thousands of dollars in legal costs, most of the patent trolls’ targets pay up.

The special interests that are getting rich from this legalized extortion prevailed in shelving much-needed reforms in the Senate, but we’re not done here. 

As long as the Senate is unwilling to take action, the problem will continue to worsen.  Operating under the guise of shell companies, patent trolls will continue to extract $1.5 billion per week from some of our country’s most innovative companies.

Patent trolls don’t invent anything. They don’t produce anything and they certainly don’t contribute anything positive to our economy. All they do is siphon needed resources from the companies that commercialize technologies, create jobs, and contribute to our country’s prosperity and competitiveness.

The legislation that the Senate Judiciary Committee just tabled includes strong protections, such as “demand letter” reform, discovery reform, and fee-shifting from those who file frivolous lawsuits to those who successfully defend themselves.

This would have been a huge help to companies like FindTheBest, allowing us to focus on building our businesses instead of fighting off patent trolls. And it would save other companies from facing frivolous patent lawsuits and having to spend scarce resources to fight back or pay up.

That is why patent reform passed the House with bipartisan support. Democrats and Republicans agree with President Obama’s clarion call, in his 2014 State of the Union Address, “Let’s pass a patent reform bill that allows our businesses to stay focused on innovation, not costly, needless litigation.”

To break the gridlock in the Senate, patent reform needs a groundswell of public opinion. Americans who enjoy the fruits of innovation – smartphones, apps, search – need to tell their Senators to stop siding with patent trolls and trial lawyers who are getting rich off of other people’s hard work. If you are pro-small-business, pro-innovation, pro-jobs, and pro-economic-growth, then bring patent reform back now.

O'Connor is CEO of FindTheBest, an online research engine, headquartered in Santa Barbara, California.

 

More in Overnight Technology

OVERNIGHT TECH: Patent chief to face questions on 'troll' bill

Read more »