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Patent trolls hurt innovation
Public Policy

7 ways to put patent trolls in the ground for good

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They aren’t a new roadblock to innovation. But the proliferation of patent trolls has meant that every sector of the economy is subject to their abuses and frivolous lawsuits, and retailers happen to be some of the most frequent targets. 

The Precipitous Rise of Patent Trolls

Shell companies (also referred to as non-practicing entities or NPEs) accounted for 63 percent of all patent cases filed in 2014.

There were 36 percent more cases filed this January than in the same month last year.

Another 499 patent litigation cases were filed last month, marking the third straight month-on-month increase in patent lawsuit filing.

The industry’s broad use of technologies such as Wi-Fi routers, smartphone apps and online shopping cart and shipping logistics software have put several companies in the crosshairs of costly litigation. One of the most recent claims comes from SmartflashLLC, stating that Apple must pay $532.9 million because iTunes infringes upon three online-related patents. As Apple’s Kristin Huguet told Bloomberg, “… the shell company makes no products, has no employees, creates no jobs, has no U.S. presence and is exploiting our patent system.”

The state of today’s patent litigation is innovation’s worst enemy, and House and Senate leaders agree it is time to restore balance to the system. Overstock.com’s General Counsel Mark Griffin testified before Congress today about the importance of intellectual property, patent rights and the toll of patent trolls on business. Contact your Representative today and encourage them to support HR 9, The Innovation Act, and make sure it meets these goals for reform.

The toll of patent trolls at Overstock.com

Make demand letters include truthful, basic information. It’s a risky course legally, but Life360 founder Chris Hulls makes a very provocative case for how to respond to a patent troll’s ambiguous demand letter.

Enforce explicit terms for an alleged infringement. This vagueness has allowed for a dramatic spike in costly lawsuits over the last decade.

Ensure that a customer’s case is put on hold while the case against the manufacturer proceeds. This will reduce the spread of costly litigation to other companies that use a patented product they did not build.

Determine the definition of a patent up front. Requiring patentees to explain and judges to decide what a patent means at the beginning of a case — also known as the Markman hearing — will narrow the case to the actual legal issues in question, drive early resolutions and do more to avoid a drawn-out and expensive discovery process. 


Put a stop to discovery abuses. Holding patent trolls financially responsible for the discovery of information beyond core documents is one safeguard against running up costs just to force a settlement.

Make abusive trolls pay. Trolls currently have few barriers to litigation with no significant costs. But shifting court expenses and other fees to winning parties in truly frivolous patent cases could stymie more unwarranted patent claims
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Create fair and efficient alternatives to litigation for re-examining questionable patents and reduce litigation abuses.

With no industry of the American economy left untouched, retailers have joined with technology companies, auto manufacturers and various other sectors in a coordinated effort to ask Congress to pass legislation which will deter the patent troll business model. Together, these goals for reform will make efficient and effective changes without harming the value of patents.

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Fair Patent Laws
Fair Patent Laws

Retailers using the latest technology to create jobs, grow the economy and serve their customers should be protected against frivolous lawsuits over obscure patents. Congress needs to address “patent trolls” – firms that buy patents for things they didn’t invent, then threaten to sue innocent companies unless they pay a licensing fee.

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