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Law360: Patent Bill Would 'Do More Harm Than Good,' Lawmakers Told
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“Companies with less than $100M annual revenue represent at least 66% of unique defendants to troll suits and at least 55% of unique defendants in troll suits make $10M per year or less. Suing small companies distinguish PAEs from operating companies, who sued companies with less than $10M per year of revenue only 16% of the time, based on unique defendants.”
"Startups and Patent Trolls" (Colleen V. Chien, Santa Clara University School of Law)
“We find little evidence that NPEs promote invention overall. Publicly-traded NPEs cost small and medium-sized firms more money than these NPEs could possibly transfer to inventors.”
“The Direct Costs from NPE Disputes” (James Bessen & Michael J. Meurer, Boston University)
“Assertion of invalid patents raises costs and deters innovation through licensing and litigation.”
"The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition, March 2011." (A report by the Federal Trade Commission)
“If litigation does take place, it typically costs millions of dollars and takes years to resolve. This wastes resources.”
"To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy. October 2003." (A report by the Federal Trade Commission)
"[T]he risk of litigation falls disproportionately on small firms... . So the recent doubling of litigation hazards may well impose substantial costs."
"The Patent Litigation Explosion" (Michael J. Meurer & James Bessen, Boston University)
"[T]he litigation behavior of NPEs has negative real consequences on innovation activity. In particular, after losing to NPEs in court, targeted firms innovate less and have lower-quality innovations...on average, NPEs behave as patent trolls that chase cash and negatively impact future innovation.”
"Patent Trolls: Evidence from Targeted Firms" (Lauren Cohen at Harvard Business School and NBER, Umit G. Gurun at the University of Texas at Dallas, and Scott Duke Kominers at Harvard University)
"[A] large and increasing body of evidence indicates that the net effect of patent litigation is to raise the cost of innovation and inhibit technological progress, subverting the very purpose of the patent system."
"Letter to Congress" (James Bessen, Boston University School of Law, et al.)
"When a troll sues, or even threatens, a small startup, the results can be disastrous. Many of us have seen young companies fail in the face of such threats. In fact, a recent survey found that 70% of VCs have portfolio companies that have received patent demands, the majority of which come from so-called patent trolls. This is not sustainable. To promote continuing growth in our startup economy, we need comprehensive patent reform legislation that will provide small companies the tools to fight back against patent trolls and will curb the worst behavior of the most egregious actors."
Letter from 140 Startup Investors Call on Congress to Pass Broad Patent Reform (March 17, 2015)
"Sadly, it has become clear that the current litigation environment surrounding our patent system has become an immense burden on the very innovators and innovations that the Constitution sought to encourage and protect. Each year, abusive patent litigation drains tens of billions of dollars from the economy, creating tremendous deadweight losses as well as a great deal of uncertainty."
Letter from 12 Free-Market Groups Supporting House Patent Reform Legislation (March 12, 2015)
"[A] large and increasing body of evidence indicates that the net effect of patent litigation is to raise the cost of innovation and inhibit technological progress, subverting the very purpose of the patent system."
Letter from 51 Economics and Legal Scholars Support Patent Reform (March 2, 2015)
“Patents are bedrock to the American innovation economy, but when they are used by patent trolls to extort American businesses, Congressional action is unquestionably necessary. Today, abusive patent litigation is killing small companies, chilling employment and growth of all companies, and stifling the economies of a wide range of industries nationwide.”
Letter from nearly 400 companies and organizations (April 30, 2014)
“So-called patent trolls stifle innovation and harm our economy by making dubious claims of patent infringement and using the threat of expensive litigation to extort money from small businesses and nonprofits… While these threats were once focused on tech businesses, they are now levied at all manner of businesses, including banks, hospitals, restaurants and hotels.”
“Many trolls target small companies just after they receive outside funding or announce new products. The results are harsh: companies shut down, innovative products not offered, jobs eliminated, and dispirited entrepreneurs.”
“Patent trolling works because patent trolls offer to settle for less than litigation would cost. That means they single out small businesses as targets.”
“The Administration supports House passage of H.R. 3309, as reported with a strong, bipartisan vote by the House Judiciary Committee. The bill builds on the important patent reforms contained in the America Invents Act (P.L. 112-29) and successfully implemented by the U.S. Patent and Trademark Office. The bill would improve incentives for future innovation while protecting the overall integrity of the patent system.”
Statement of Administration Policy on the Innovation Act (Dec. 3, 2013)
“In 2012, patent trolls filed more lawsuits against small and medium-sized non-tech businesses than against tech companies. The many targets of this abuse, ranging from food providers, retail stores and media companies to financial institutions, hotels, gaming entertainment companies and other industries that drive the U.S. economy, have been left with no choice but to defend themselves through inefficient and burdensome processes, rarely avoiding costly litigation.”
“We strongly support our nation’s patent system, and we played an active role helping to pass the America Invents Act to modernize and improve that system. We recognized at the time, however, that work remained to address the abuses occurring in the litigation system. Since the AIA, those abuses have multiplied and spread. Today, the negative impact of patent assertion entities, or so-called “patent trolls,” is being felt from Silicon Valley to Main Street, causing an $80 billion a year strain on our economy.”
“With significant patent portfolios tied to numerous goods and services sold around the world, many of our member companies are all too often forced to divert considerable resources toward defending themselves against abusive and expensive lawsuits. These costly lawsuits are a tax on innovation and a drain on our nation’s judicial resources as well as the economy.”
“There is near-universal recognition that abusive patent litigation creates a heavy burden for companies across the US economy — slowing innovation, undermining competitiveness, and stunting economic growth. Predatory patent litigation is an urgent problem that demands legislative action.”
“Without needed reforms that assure that asserted patent rights are legitimate and frivolous litigation schemes are curtailed, the ability of businesses owned by Realtors®, many of which are small businesses, to grow, innovate and better serve modern consumers will be put at risk.”
“Patent trolls have threatened public transportation patent infringement claims. Opting not to undertake expensive and time which would cost millions of dollars, many of these cash financial settlements with patent trolls sacrificing scarce resources that should have to providing needed public transportation to move people to their jobs, school to providing needed public transportation to move people to their jobs, schools, and places of worship.”
Letter from American Public Transportation Association (Dec. 2, 2013)
“The magnitude and front-loaded nature of patent litigation expenses creates an opportunity for abuse. Patentholders can file suit and quickly impose large discovery costs on their opponents regardless of the validity of their patent rights and the merits of their infringement allegations. Companies accused of infringement, thus, have a strong incentive to fold and settle patent suits early, even when they believe the claims against them are meritless.”
“These non-practicing entities do not make or sell anything. Their exploitation of patents as a tool for extortion is undermining America’s technological progress; patent trolls are collecting taxes on innovation by extracting billions of dollars in dubious licensing fees, and wasting the time and management resources of creative businesses.”
“Comprehensive legislation to reduce abusive patent litigation will make the patent troll business model less attractive, and will protect software, mobile and information technology entrepreneurs. In turn, our digital economy will continue to grow and so will our national economy.”
“The current patent reform debate is driven – rightly -- by concerns over abusive conduct in litigation. Efforts to deter this conduct, through measures such as balanced fee shifting, heightened pleading standards, and discovery reform, are warranted to deter the increasingly aggressive and abusive practices of ‘patent trolls.’”
“In fact, the number of companies being sued with business method patents has increased 28% a year on average since 2004. Many more were threatened. These suits frequently involve low-quality patents that cover standard features of e-commerce, like online shopping carts, store locators on websites, and shipment notification emails sent to customers.”
Letter from organizations who support CBM review (Oct. 28, 2013)
“The rising tide of these damaging suits is contributing to the suppression of the U.S. economy and hampering job creation and commerce.Economic damage caused by PAEs is estimated by Boston University to be around $29 billion annually, and a single may easily cost the defendant over $1 million—even when the defendant prevails.”
"We urge you to pass the Innovation Act of 2015 (H.R.9). We are the CEOs of America’s leading Internet companies. As such, we have direct experience of the negative consequences of the patent troll business model on our economy. We are also innovators; in fact, many of us are proud patent holders. The jobs, goods, and services that make up our economy depend on innovations like ours to be protected by patents."
Letter from the Internet Association Chairmen and CEOs of Major Internet Companies (July 16, 2015)
"We are writing to urge the swift passage of legislation to protect America’s innovators from the abusive practices of patent trolls. Comprehensive patent reform legislation will ensure transparency and specificity in judicial complaints, address the imbalance in litigation burdens, and provide real alternatives to litigation."
"We are inventors and innovators growing small businesses and creating jobs in America. Many of us are patent holders. We write to express our strong support for the PATENT Act and the Innovation Act, comprehensive patent reform legislation that would deter bad actors and incentivize more innovation among our community of startups nationwide."
Letter from Startups in Support of Patent Reform (October 29, 2015)
"On behalf of the undersigned civil-society and public-interest organizations, we write to express strong support for S.2733, the Venue Equity and Non-Uniformity Elimination (VENUE) Act of 2016, sponsored by Sens. Jeff Flake, R-Ariz., Cory Gardner, R-Colo., and Mike Lee, R-Utah. Preventing gamesmanship in litigation through choice of court, while not a comprehensive fix to problems within the patent system, would go a long way toward stopping a longstanding abusive practice that harms legitimate innovators, the economy, and the public."
Broad coalition supports bill to curtail forum shopping in patent litigation
“The Supreme Court today reaffirmed the U.S. Patent and Trademark’s Office’s broad authority under the America Invents Act to review the validity of questionable patents. The Court rejected two challenges to the PTO’s inter partes review, or IPR, proceeding, upholding the PTO’s use of the broadest reasonable interpretation standard for claim construction and concluding that the PTO’s decision to institute an IPR proceeding is final and not appealable."
"The disproportionate number of patent plaintiffs—and NPEs in particular—bringing cases in a single venue ultimately results in wasted judicial resources, as more of those cases are overturned on appeal. For accused infringers, the costs of innovation are increased when they have little or no connection to the venue and are forced to litigate from a distance. The harm caused by abuse of the system and the resulting loss of trust in the uniformity and justness of the U.S. patent law system is unmeasurable. This type of dynamic is bad for patent law, and bad for United States innovation. It is thus critical that Congress act now to pass targeted patent venue reform."
Letter from 45 Law and Economics Professors Supporting Venue Reform