November 5, 2013 | By Julie Samuels

A Closer Look at Patent Troll Demand Letters: A Dangerous Problem that Must Be Fixed

We've been talking a good deal lately about the promising Innovation Act. And with good reason—it looks like the best chance we've had for real patent reform that would actually help those getting crushed by the patent system. The bill is not perfect, though, and has at least one glaring error: it does not address the serious harm that comes from patent troll demand letters.

Patent litigation is notoriously complicated and expensive, making it the perfect tool for patent trolls. Trolls use the costs of litigation as a threat to demand quick settlements. Even worse, they know how to ask for the right amount of money at the right time. Is your startup about to release a new product? Secure a round of funding? The perfect (and most dangerous) time for a troll to strike.

The letters demanding these payments are often evasive, failing to include details about the patents, who owns those patents, and the products or services that allegedly infringe. They fail to give recipients the information to make rational decisions, such as whether they should pay the troll, ignore the letter, or go to court to fight it. Just hiring a lawyer to ascertain that seemingly simple information can easily cost well into the tens of thousands of dollars.

The letters raise even more fundamental concerns, too. Because they happen before a legal complaint is ever filed, they are not part of the public record. And once a settlement or license is signed, it will likely include a non-disclosure provision, prohibiting the letter's recipient from talking publicly about its contents. This means that the scope of the problem is often underreported, making it harder for policymakers to understand the true scale of the patent troll problem.

We, along with a large coalition, launched Trolling Effects to combat this problem. Trolling Effects is a database of demand letters, open to the public. You can submit letters you've received, search others' submissions, and find out more information on the trolls and the patents they weild.

But in order for this tool to be successful, we need your help. We need you to spread the word and help us get as many letters into the database as possible. Each new demand letter is crucial to Trolling Effects, even if a nearly identical letter has already been posted. Each one provides key insights into the patent landscape: who the bad actors are, what patents are being asserted and how often, and who's being targeted.

If you have received a patent demand letter, submit it to Trolling Effects. The site has measures built in so particular items information can remain private.

Trolling Effects is an important tool to fight the dangerous barrage of patent demand letters, but we need a more long-term fix to the problem. Comprehensive patent reform legislation should require patent trolls to include enough information in demand letters to give its targets necessary information they need. It should also require that the trolls report on how many letters they've sent, and how often they've actually followed up with a lawsuit. The practice of sending demand letters to extort quick settlements is not one that the U.S. patent system should protect; we need real demand letter reform now.

The good news is that the Senate Commerce Committee is looking into these issues in a hearing this Thursday; EFF's own Julie Samuels will be testifying. We hope the Committee's interest is a sign of positive things to come.


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