Trolls suck $29 billion out of our economy each year. Not the Internet kind, who hide beyond keyboards, or the fairytale kind, who hide under bridges. Instead, these trolls take their toll by exploiting the patent system, hiding behind vague demand letters and shell corporations, while extorting payments from unsuspecting businesses.
Patent trolls, or non-practicing entities, take patents and apply them to technologies for which they were never intended. Because nearly every business uses technology for its work, everyone has become a target.
Even Realtors® have found themselves the targets of these lawsuits for using common technologies. These include such mundane things as using a scanner attached to a network or providing search features on their websites. Instead of working to support the real estate business, which contributes $2.5 trillion to the U.S. economy, these Realtors® were dealing with lawyers to try to protect themselves from the trolls.That’s what happened to J.B. Goodwin, broker owner of JBGoodwin REALTORS® in Austin, Texas, after he received a legal summons in early 2014 notifying him that his company was being sued in federal court for patent infringement.
The summons was cryptic and the allegedly patented process outlined in the document was one used by practically every single person who has ever looked for a home – the property search. Goodwin and several other brokers were being sued for including online property listing search technology on their websites.
The other brokers settled their lawsuits, but Goodwin refused and prepared to go to court. The more he learned about the company suing him, he has said, the clearer it became that the company didn’t want to go to court – they wanted settlement money. So he fought. Eventually the complaint against him was withdrawn, but the legal fees amounted to more than $100,000 and Goodwin spent several weeks away from managing his brokerage.
Realtors® aren’t the only targets. These trolls sue indiscriminately, going after grocery stores, printers, coffee shops, automakers and everything in between. Trolls’ targets are faced with a choice between paying the money the trolls demand, or engage in lengthy and expensive lawsuits. It’s a lose-lose situation.
Fortunately, patent reform is one of the few things that Congress can agree on. Politicians from both parties have supported reform, and the president has made it a policy priority.
This week the Senate Judiciary Committee introduced a bill with bipartisan support aimed at ending trolls’ most egregious practices and represents a strong first step towards protecting Realtors® and businesses across the country. The bill is sponsored by Chairman Chuck Grassley (R-Iowa), Ranking Member Patrick Leahy (D-Vt.) and Sens. John Cornyn (R-Texas), Chuck Schumer (D-N.Y.), Orrin Hatch (R-Utah) and Amy Klobucher (D-Minn.). A similar bill was introduced earlier this year in the House.
These bills include a number of reforms that will protect American businesses small and large, across every industry from trolls. For instance, the Senate bill requires trolls include specific information in letters where they demand companies pay a licensing fee or get sued. More details will help companies that receive letters better assess demands on their own. Additionally, the bills make the litigation and discovery process more efficient to weed out weak cases and place limits to stop trolls from running up legal costs.
It’s vital that Congress passes these bills without delay. Every day they wait, patent trolls continue to take their toll on job-creating businesses. The time is now for us to take back our patent system and make it work for businesses, consumers and innovation, not against us.
Polychron is president of the National Association of Realtors®.