This week the Senate Judiciary Committee may hold a markup on patent reform legislation and the outcome is yet to be determined. The House overwhelmingly passed the Innovation Act, the companion bill, in December and now it is up to the Senate to pass critical legislation to protect small businesses.
This legislation is critical to protecting America’s small businesses, the backbone of our economy, who are under attack from patent trolls. Patent trolls are entities that buy patents and launch lawsuits, but do not create or sell anything. They initiate often unsubstantiated lawsuits causing small businesses to spend thousands, sometimes millions, of dollars to settle these suits.
The damage these patent trolls do is staggering, and they are diverting critical resources young companies need to thrive. About 2,700 troll lawsuits were filed this year, compared to 144 a decade ago. The average patent troll case costs $2 million and lasts 18 months, so small businesses are cornered into settling regardless of whether or not the claims are true. In fact, 90 percent of patent troll cases involving Internet business method patents lose when they make it to court. However, most companies simply don’t have the resources to fight back and pay legal fees for an extended period of time. In 2011, troll suits cost American companies $80 billion, which includes $29 billion in direct payouts benefitting lawyers and not inventors. Only one-quarter of direct payouts collected go back into funding innovative activity.
Rather than spend resources dealing with unsubstantiated lawsuits, these companies should be focused on what they do best – creating valuable new and dynamic products and services that employ thousands of people, increase productivity, enable instant communications, and entertain the world.
And patent trolls don’t just affect companies in Silicon Valley. Their litigation campaigns harm companies from Internet companies to coffee shops on Main Street and every corner of the country where job creation is critical.
Common sense reform is needed to ensure that our country continues to encourage the growth of small businesses and maximize their long-term potential to create jobs.
President Obama has taken executive action to make sure the patent system is promoting real innovation and deterring abusive patent litigation, and he has called on Congress to act. Just two years after patent reform legislation passed Congress, bipartisan bills introduced in both the House and the Senate to stop the trolls are gaining momentum.
Patent trolls are straining innovation, but Congress has the power to change this. It must act now to stop bad patents and rein in these egregious trolling tactics. Together, we can put patent trolls out of business for good and see more and better innovations, products and services come to market at lower prices. Click here for a list of Senators sitting on the Senate Judiciary Committee and their Twitter handles. Tweet Congress Congress and tell them to end patent abuse.