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Startups and their venture capital investors are caught in the crosshairs of patent trolls, but the damage these unscrupulous litigants are inflicting isn’t just legal or financial – it’s hampering business and stifling innovation, according to a new report that reaffirms the urgent need for aggressive legislative action by the U.S. Congress.
The U.S. Government Accounting Office (GAO) just released a long awaited study on the consequences of patent litigation by nonpracticing entities, aka patent trolls. The study validates the position of Rackspace and thousands of other companies: overbroad and inscrutable software patents, which shouldn’t have been issued in the first place, are the primary reason patent trolls are able to target and extort settlements from legitimate operating businesses, diverting precious capital away from research, development and job creation. The GAO report adds to the overwhelming body of evidence that Congressional action is sorely needed to bring the $29 billion patent troll problem under control.
We’ve said it before: it will take an army to battle patent trolls and inspire true patent reform.
The patent reform effort on Capitol Hill continues to make progress. Yesterday, Representatives Darrell Issa, R-Calif., and Judy Chu, D-Calif., introduced H.R. 2766, Stopping the Offensive Use of Patents Act (the STOP Act). The STOP Act is very similar to the Patent Quality Improvement Act, introduced by Senator Charles Schumer of New York just a few weeks ago, which we blogged about previously.
The New York Times last Sunday published an article by David Segal, “Has Patent, Will Sue: An Alert To Corporate America,” in which the owner of IPNav is exposed as an unapologetic patent troll.
In a major step in the ongoing war against patent trolls, 50 trade associations, coalitions and public interest groups today sent an open letter to Congress to urge congressional leaders to take action “to address abuses of the legal system by certain patent assertion entities, commonly referred to as patent trolls.” The letter was conceived and organized by the Coalition for Patent Fairness which has been a leading voice in the effort to reform U.S. patent laws.
For months, we’ve written about our opposition of patent trolls and their attempts to extort hundreds of thousands—or even millions—of dollars from companies that actually create value. These patent-powered parasites kill innovation, drain the economy and strip away capital from businesses both large and small.
The patent abuse fight is picking up momentum, and we have new ammunition. Yesterday, the senior Senator from Texas, John Cornyn, introduced the Patent Abuse Reduction Act of 2013 (the “PAR Act”). My home state U.S. Senator has just taken a huge step to solve the patent troll epidemic. This bill is a breath of fresh air in the battle against patent trolls and their brazen abuse of the patent system. The PAR Act is designed to “deter patent litigation abusers without prejudicing the rights of responsible intellectual property holders,” Cornyn said in a statement.
For the past several months, we’ve exposed the flaws in the patent system and how they’re being exploited by opportunistic patent trolls looking to extort a quick buck – or hundreds of thousands of bucks, if you will – from businesses large and small. It’s a drain on innovation, a plague to all of technology and a drag on the economy.
For years Senator Charles Schumer of New York has been a driving force in the battle to abolish low quality business method patents, the type that patent trolls regularly use to attack businesses with vexatious lawsuits. He authored Section 18 of the America Invents Act, which is known as the transitional program for covered business method patents.  The purpose of the program is to create an effective and fair post grant review for business method patents used in the “practice, administration, or management” of a financial product or service.
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