White Castle first opened our doors in Columbus in 1921. Today, our nearly 10,000 team members working in 406 restaurant locations across 12 states deliver the "Taste America Craves." We remain a family owned business committed to our customers and our communities. Our success has been driven by the principle that good business, great food and responsible citizenship should all go together.
The restaurant industry, with nearly one million locations, is an incredibly competitive industry. We are constantly seeking new ways to provide additional value to our customers and keep them coming back to our restaurants. This includes our online ordering applications to searching for your nearest white castle location on your mobile device.
Unfortunately, there is a rising threat to White Castle and many other companies interested in providing our customers with the experience they want…it’s called a “patent troll.” Now, as you can assume by the name, these patent trolls aren’t your legitimate patent holders or small inventors. These are entities that are created to exploit ambiguities in the patent system to make money off of Main Street businesses.
Here are some examples of what White Castle , as well as, other businesses around the country face:
At White Castle, we have seen challenges with the technology related to our digital menu boards; our promotional programs linked to QR codes on packaging; store locator from our website and smartphone application; and the shortening of links we use to text and tweet offers and updates to our loyal customers. Alarmingly, patent trolls will increasingly be a thorn in our side, as we attempt to bring more customer-facing technology to the White Castle brand and our customers, including a continued build-out of our smartphone application.
Patent trolls conduct their business in a very deliberate manner. They threaten us with litigation if we don’t pay a licensing fee for their alleged patented technology, but their demands are so obscure that it is virtually impossible to determine the validity of the patent claims, or even whether they own the patent in question. When we receive a patent assertion claim, it typically comes in the form of a letter demanding that we pay licensing fees or be taken to court. Other times, suits are filed directly. We have two exceptional in-house lawyers, but often we have to hire an outside patent specialist to review the claims because the letters we receive have such limited information about the patent infringement claims. At a minimum, our expenses include the costs associated with hiring outside counsel. In the past two years, our legal costs associated with patent trolls have increased from one-quarter of one percent to nearly twenty percent of our total legal costs.
When we receive a demand, we have three options: 1) Pay the licensing fee, which is essentially feeding the trolls; 2) Go to court anticipating a lengthy and costly trial; 3) Curb our use of the technologies in question. Regrettably, even where a patent assertion claim is frivolous, the prohibitive costs and time associated with a drawn out legal process, often prevents us from defending ourselves in court. Rather, the wiser business decision for our family-owned and operated business, and our 10,000 employees, is to curb the use of the technology. That’s not good for our business, or our customers. Furthermore, because of the threat we face by patent trolls, we have begun to modify our approach to partnering with third-party technology providers in a way that is not beneficial to innovation and the economy.
In order for us to continue to strive as a leader, job-creator and innovator in the industry, it is critical that we have the ability to integrate new technologies that our customers want without the daily fear of receiving frivolous demands from these patent trolls. We urge Congress to pass meaningful reforms without delay, so White Castle, and others in our industry can continue to invest in our business, employees and loyal customers. We want to continue to rollout innovative technologies that improve business efficiencies, meet consumer demand, and provide value to the communities we serve. The Innovation Act is a strong first step toward curbing patent trolls, and we are hopeful that Congress will take up and pass this legislation in an expedient manner with the inclusion of additional provisions that will increase transparency and curb the practice of obscure patent troll demand letters.
Ingram is president of the White Castle System, Inc.