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Entrepreneurs Tell USPTO Director Iancu: Patent Trolls Aren’t Just “Monster Stories”

DEEPLINKS BLOG
February 14, 2019

Entrepreneurs Tell USPTO Director Iancu: Patent Trolls Aren’t Just “Monster Stories”

Patent trolls aren’t a myth. They aren’t a bedtime story. Ask a software developer—they’re likely to know someone who has been sued or otherwise threatened by one, if they haven’t been themselves.

Unfortunately, the new director of the U.S. Patent and Trademark Office (USPTO) is in a serious state of denial about patent trolls and the hurt they cause to technologists everywhere. Today a number of small business owners and start-up founders have submitted a letter [PDF] to USPTO Director Andre Iancu telling him that patent trolls remain a real threat to U.S. businesses. Signatories range from mid-sized companies like Foursquare and Life360 to one-person software enterprises like Ken Cooper's. The letter explains the harm, cost, and stress that patent trolls cause businesses.   

Patent trolls aren’t a thing that happens once in a while or an exception to the rule. Over the past two decades, troll litigation has become the rule. There are different ways to measure exactly what a “troll” is, but by one recent measurement, a staggering 85 percent of recently filed patent lawsuits in the tech sector were filed by trolls.

That’s almost 9 out of 10 lawsuits being filed by an entity with no real product or service. Because the Patent Office issues so many low-quality software patents, the vast majority of these suits are brought by entities that played no role in the development of the real-world technology they attack. Instead, trolls use vague and overbroad patents to sue the innovators who create products and services. This is how we end up with patent trolls suing people for running an online contest or making a podcast.

Three Steps Forward, Two Steps Back

The news isn’t all bad. Reformers have made substantial progress in the fight against patent trolls. A string of positive Supreme Court decisions, beginning with the 2006 eBay v. MercExchange decision, and going on through 2014’s Alice v. CLS Bank ruling, have made it feasible to fight trolls in court. Meanwhile, the America Invents Act created a useful new process for challenging bad patents right in the patent office—the inter partes review

Supreme Court decisions have made it harder for patent trolls to rope defendants into remote, inappropriate venues like the Eastern District of Texas; easier to award fees against patent owners who abuse the system; and perhaps most importantly, the Alice decision has made it easier to knock out bogus software patents more quickly.

Those victories haven’t solved the problem. Still, they have slowed down the onslaught of litigation by patent trolls and the lawyers who help them. Just to focus on a single, prolific bad actor, take the shell company ArrivalStar, which later morphed into to Shipping & Transit LLC. Several years ago, the Shipping & Transit lawsuit machine was able to scare both private companies and even public transit agencies into coughing up $80,000 or more for valueless “licenses.” Shipping & Transit ultimately skimmed hundreds of thousands of dollars from cash-strapped cities and millions more from companies large and small. Later, bolstered by the new reforms, small companies fought back—and won. Today, Shipping & Transit is bankrupt, can’t sue anyone, and admits that patents it used to demand millions in licensing fees are worth just $1.

The victories we’ve won are why the trolls and their allies are out in force this year. They’re pushing awful legislation like the STRONGER Patents Act, which would roll back just about every reform that has given victims of trolling a fighting chance. The trolls and abusive companies that have profited off the patent system have now won a considerable prize. The man who runs the office where patents are granted has said clearly that further reforms aren’t necessary. It’s disappointing, but considering their over-the-top lobbying efforts, it isn’t surprising.

Trolls Are All Too Real

Director Iancu has gone much further than saying he’s skeptical of reform. Iancu appears to question whether patent trolls even exist. In a recent speech, he called accounts of patent trolling “scary monster stories.” Iancu clearly isn’t listening to the stories of small businesses hit by patent demands week after week. But we do hear from those businesses—over and over again. We won’t stand idle while Iancu denies basic facts about what’s going on in the U.S. patent system.

It isn’t hard to find entrepreneurs who have been hurt by patent trolls. We highlight just a few of those innovators in our “Saved by Alice” series. These business owners endured years of stress, huge costs, and sometimes bankruptcy, because they were threatened by patent trolls that produce nothing. And they are the few that are brave enough to speak up—many more are too afraid to speak out, else be targeted with yet another expensive lawsuit. 

These aren’t myths. The flood of lawsuits we witness isn’t an opinion. The cases are real and the damage they do to defendant companies is undeniable. Iancu is choosing to ignore this situation, to satisfy his audience. And the audience he’s chosen says it all. When Iancu called patent trolls “monster stories,” he was speaking to a gathering of lawyers and judges in the Eastern District of Texas—the heart of the problem. The signaling couldn’t have been more clear. Iancu is working to overturn hard-won reforms and to re-open the spigot of patent trolling dollars that flows into that skewed venue.

When Iancu hails the innovation produced by the U.S. tech sector, he’s absolutely correct. Innovation in software and tech is everywhere we look. But patent trolls are there, too, and easy to find. When it comes to patents, the magical thinking isn’t coming from reformers. Rather, it’s on full display at the exclusive conferences that Iancu is speaking at, surrounded by patent owners, patent lawyers, and patent-licensing insiders. We’re in danger of heading back to a wrongheaded mentality that “more patents equals more innovation.” That’s the real myth.

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