Virginia’s own Congressman Bob Goodlatte, Chairman of the House Judiciary Committee, is leading the way on an important piece of legislation designed to help protect businesses large and small from patent trolls who cost them millions of dollars in frivolous legal fees. The following article by Jonathan Zuck, President of the Association for Competitive Technology, does an outstanding job explaining the importance of this issue and why Congressman Goodlatte’s legislation, in its present form, is so helpful to all types of businesses around the country. Congratulations to Congressman Goodlatte for the outstanding work he is doing:
Virginia innovators have led the way in the explosive growth of the new $68 billion App Econo-my. New companies are springing up every day in the Commonwealth producing apps for our mobile devices. But while smartphones and tablets top many holiday lists this season, the gift that tech entrepreneurs want most is the end of patent trolls.
Patent trolls are a scourge throughout the tech industry. These entities file lawsuits or threaten litigation to thousands of companies at a time speculatively claiming patent infringement where often none exists. A patent troll strategy relies on targeting companies that would rather seek a costly settlement than be subject to a protracted legal battle. They cynically use the most effec-tive intellectual property protections against the companies most vulnerable to attacks on their invention.
Recently, patent trolls have set their sights on startups and small businesses which make more than three-quarters of the top-ranked apps. This is a marketplace where Virginia businesses ex-cel. Alexandria’s Vito Technology, whose Star Walk app helps schoolchildren learn constella-tions in the evening sky, is one of the most successful education apps ever with over five million downloads. Other companies on the rise include Virginia Beach’s Magoozle, with its public speaking app PodiumPro, and Norfolk’s VinylMint that helps musicians collaborate remotely through the cloud.
These new companies are enjoying early success with much bigger days to come. But such promise could come crashing down for those targeted by a patent troll. When that happens, a company typically receives a threatening letter alleging infringement while identifying neither the holder nor the patent infringed. The recipient must then hire legal counsel to determine what pa-tents may be involved and whether infringement occurred. This is like looking for a needle in a haystack given how little information the correspondence often provides.
The legal expenses for research alone can be very costly and a patent case can cost in the mil-lions. Most app makers have very limited experience with the patent system and are more likely to pursue a settlement instead of an extended court battle, regardless of the merits of the claim. This simply emboldens patent trolls who may target the same company again with further action. Pursuing thousands of cases at a time and costing our economy tens of billions of dollars, patent trolls are a serious threat to small business innovation.
Help may be on the way soon if Virginia congressman Bob Goodlatte has anything to say about it. His Innovation Act passed the House Judiciary Committee, of which he is chairman, with provisions that will cut down on the ability of patent trolls to wreak havoc on the tech industry. Mr. Goodlatte reached across the aisle to win bipartisan support for this intellectual property leg-islation that would bring transparency to the patent litigation process; allow judges to compel the loser to pay attorney’s fees in frivolous cases; and restrict the ability of litigants to run up costs through the discovery process. These are sensible steps that will help small businesses profit from their invention and mitigate the negative impact of patent trolls on the Virginia economy.
In Committee, Chairman Goodlatte also wisely resisted measures that would undercut the effec-tiveness of his bill. One such proposal concerned covered business method patents and sug-gested that these cases should be heard by the Patent and Trademark Office. Its proponents argued that it would improve the patent system. In fact, this would only subject Virginia busi-nesses to even more litigation by adding an additional venue at which they must defend them-selves. With typical legal fees for a patent case approaching a million dollars, this could have undone all the good work limiting litigation in the bill and made it harder for small businesses to protect their innovation.
This controversial provision could have threatened the passage of the entire bill. But after it was wisely removed by Chairman Goodlatte, the Innovation Act received an overwhelming 33-5 vote of support in the Judiciary Committee. With Washington agreeing on little else these days, the chance to pass meaningful reforms that help Virginia businesses is something we can all em-brace.
Prospects appear good for the bill’s passage in the House and Senate. If Congress does not al-low controversial elements like the covered business method patent provision to derail the bill, Virginia businesses may get the present they really want this holiday season.
Jonathan Zuck is president of the Association for Competitive Technology, an international grassroots advocacy and education organization representing more than 5000 small and mid-size app developers and information technology firms.