Taking back our patent system

Washington is broken we’ve been told; the political will that exists beneath the Capitol dome isn’t strong enough to break through the partisan wrangling. Politics is hard, governing even more so. But where there is agreement, action must surely follow, and despite our many differences, Democrats, Republicans, the White House and industry all agree that America’s patent system needs reform.

Our nation’s economy is improving, but patent trolls, entities whose main purpose is to use expensive patent litigation to extract monetary settlements, remain a constant drain on businesses large and small across every industry. From your corner coffeehouse to the local grocer and restaurant, companies of every size are fighting dubious lawsuits and inexplicable demands for payoffs by greedy patent trolls who produce no goods or services of their own. Trolls use the threat of steep litigation costs to try to extract quick settlements from legitimate businesses, even when their cases have no merit thus diverting scarce resources away from job creation and the development of new technologies.

{mosads}Even the hotel industry, which employs 1.8 million across nearly 53,000 locations nationwide, has been targeted. Some patent trolls, for example, file lawsuits or demand payoffs from hotels that offer free Wi-Fi to their guests, claiming these establishments infringe patents that allegedly cover the use of Wi-Fi. Even though makers of Wi-Fi routers have paid to license the troll’s patents, trolls often still target individual hotels and hotel chains (and even local coffee shops). Last year, we thought a legislative solution was at hand.

To the disappointment of many, comprehensive patent reform stalled in the U.S. Senate last May, even after the House of Representatives voted overwhelmingly to pass the Innovation Act by a bipartisan vote of 325-91. This legislation would have improved our patent system with targeted reforms, from heightened pleading standards to new measures to protect end users unjustly pulled into lawsuits simply for using a technology, while still protecting innovation and research. Even after a series of favorable U.S. Supreme Court rulings, patent trolls continue to wreak havoc from Main Street to Silicon Valley.

The march towards reasonable and common sense reform, however, has not ended. Today, a broad coalition of industries—including retail, restaurants, home builders, Realtors©, technology companies and many others—have joined together to urge Congress to pass the strongest possible, comprehensive patent litigation reform this year. We support a bill that prohibits patent trolls from holding American businesses hostage. In a time when it’s so important to act where common ground exists, this should be a high legislative priority for both parties.

The new United for Patent Reform coalition understands that common sense reform will not only help foster innovation, but also contribute to a better economic landscape through this year and beyond. We represent nearly every sector of the retail, hospitality, technology and construction-based economy and believe that, for example, plaintiffs should be required to explicitly state what alleged infringement has occurred before a case can proceed and that cases against product manufacturers should be decided before cases against customers, like hotels, who simply purchase and deploy the accused technology.

The inequities in the current patent litigation system also create a perverse incentive for defendants to pay to settle even the most meritless cases to avoid substantial defense fees and costs. To address this imbalance, discovery reforms are needed to focus on information that is truly needed to efficiently resolve substantive issues. Indeed, many of the small businesses who are often the target of these lawsuits simply don’t have the resources to respond to unreasonable and unnecessary discovery requests. In addition, requiring that the losing side pay the winner’s legal bills will also limit the number of meritless claims and serve as a deterrent to running up legal fees to try to force settlements. And, even before cases are filed, our broad-based coalition believes that reforms should address threatening patent demand letters so that trolls can no longer send vague and deceptive letters to innocent businesses with limited resources to investigate such claims.

We are a nation of inventors and entrepreneurs with innovations that should be encouraged and protected. However, the need to reform the patent system is about standing up for the small guy working hard to make a living and the cross-section of businesses that want to spend money growing their businesses, not fighting patent trolls. It’s time to take back our patent litigation system and make it work again; the trolls should not be the ones to benefit from the current imbalanced system.

In a city divided by so much, let’s get to work on the issues we agree upon that actually matter. We’re prepared for the hard work ahead of us, and excited to work with the new Congress to help bipartisan patent reform become a reality for those who need it most.

Van Paasschen is the president and CEO of Starwood Hotels & Resorts Worldwide, Inc. Rautio is president and CEO of Carlson, a Minnesota-based global travel and hospitality company with over 1,350 hotels and properties in over 160 countries and territories.



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