An elementary schoolgirl named Suzy set up a lemonade stand in her parents’ front yard. Each glass was sold for 50 cents. At the end of her sales, she made $12.50.
But what if Suzy was forced to shut down because a law firm sent her a letter demanding 75 cents per glass of lemonade sold because the technology she used for payment, including emailing a copy of each receipt to her customers, was under a so-called “patent?” Outrageous as that may seem, this type of practice is happening everyday as “patent trolls” target Georgia small businesses and organizations.
As a technology organization, our goal would never be to stifle innovation and technology growth. We understand firsthand the need to safeguard true innovative products and new technology inventions. But with little protection against patent trolls, often resulting in settlements totaling millions, it’s difficult to stand by while small businesses are forced to close or pay fake companies with no truthful, new innovation.
More formally known as Patent Assertion Entities, patent trolls are people or shell companies that enforce patents — their only assets — for the sole purpose of filing lawsuits. These shell companies have no employees, assets or products. They only hold “patents” and sue for their patent rights. These patents are typically vague and overly broad and hurt business owners.
A recent Boston University School of Law study, “The Direct Costs from Non-Practicing Entity Disputes,” shows that in 2011, patent trolls cost the American economy $29 billion. What’s more, a huge number of patent lawsuits were patent trolls against small businesses. In her paper, “Start-ups and Patent Trolls,” Professor Colleen Chien of the Santa Clara University School of Law reported that “companies with less than $100 million annual revenue represent at least 66 percent of defendants in troll suits, and that at least 55 percent of those defendants make $10 million per year or less.”
This is proof that the number of outrageous patent cases is on the rise. Patent trolls target small business around the country. We have seen a growing number of cases in Georgia. It’s time for Washington to take the lead against the patent troll epidemic for the sake of innovation and for the good of our nation’s entrepreneurs.
Our elected representatives in Washington have begun to take notice. Their support reflects a bipartisan desire to take action and challenge these patent trolls with solid regulations. Earlier this month, the White House issued five executive actions and seven legislative recommendations designed to protect innovators from frivolous litigation and ensure the highest-quality patents in our system.
I am proud our leaders in Washington are making progress to improve patent quality and prevent litigation abuse. But business owners and technology innovators must continue to drive efforts for patent troll awareness to ensure that the patent system is not taken advantage of in a way that restrains innovation.
Tino Mantella is president of the Technology Association of Georgia.
