Retailers Press Congress to Take Action on Patent Trolls
- By [ Jason Brewer ]
- Arlington, VA
- 03/14/2013
“The retail industry is a crucial driver of our nation’s economy, and as our customers embrace and utilize technology they expect retailers to do the same,”Bill Hughes stated in the letter. “However, abusive lawsuits brought by patent trolls have drained valuable time and resources from our companies.”
RILA urges the committee to address this senseless litigation in order to allow retailers to use innovative technologies to bring exciting new products to the consumer without the fear of abusive and costly patent troll lawsuits.
“We encourage the committee to explore solutions that will curtail these abuses of our legal system, while still protecting rights of patent owners,” said Hughes.
In 2007, 22% of patent cases were filed by patent trolls. That number has exploded to 60% in 2012, and about 90% cases are without a judgment on the merits, meaning that companies often settle even though no actual infringement might have occurred. A recent study reported the median cost of litigating a patent case through trial is between $650,000 and $5 million and the discovery phase costs $350,000 to $3 million. However, patent trolls, unlike the defendant retailer, often have little to no discovery cost because it simply purchased the patent and is not the inventor.
The House Judiciary Subcommittee on Courts, Intellectual Property and the Internet will hold a hearing later today on abusive patent litigation. Among those testifying will be RILA member company executive Janet Dhillon, Executive Vice President, General Counsel and Secretary, J.C. Penney Company, Inc.
Full text of the letter to the House Committee on the Judiciary is below and a link to the PDF is here.
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RILA is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.
March 14, 2013
| The Honorable Bob Goodlatte | The Honorable John Conyers |
| Chairman | Ranking Member |
| House Committee on the Judiciary | House Committee on the Judiciary |
| 2138 Rayburn House Office Building | 2142 Rayburn House Office Building |
| Washington, DC 20515 | Washington, DC 20515 |
Dear Chairman Goodlatte and Ranking Member Conyers:
On behalf of the Retail Industry Leaders Association (RILA), I write today to express our support for action to stem the frivolous and costly lawsuits brought by non-practicing entities or patent trolls against the retail industry. Retail is an important economic driver for the Nation’s economy. Costs diverted to patent trolls takes away from investments in our communities by building stores, contributing to the local charitable and civic organizations and creating jobs.
By way of background, RILA is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturer facilities and distribution centers domestically and abroad.
These abusive lawsuits drain valuable time and resources from our companies. As our customers embrace and utilize technology they expect retailers to do the same. Therefore, to support and deliver the services our customers want and deserve, we are employing innovative technologies to heighten the shopping experience both in our stores and online.
However, providing this benefit to our customers has, unfortunately, made us targets for an ever-growing group of sophisticated and well financed patent trolls. Unlike retailers, patent trolls are typically entities that neither make nor sell anything to the public. They are simply purchasing and using vague, broadly asserted and outdated patents to bring costly and time consuming lawsuits against America’s retail industry.
The numbers are staggering. In 2007, 22% of patent cases were filed by patent trolls. That number has exploded to 60% in 2012. About 90% cases are without a judgment on the merits, meaning that companies often settle even though no actual infringement might have occurred. A recent study reported the median cost of litigating a patent case through trial is between $650,000 and $5 million and the discovery phase costs $350,000 to $3 million. Critically important, the non-practicing entity, unlike the defendant retailer, often has little to no discovery cost because it simply purchased the patent and is not the inventor. Patent trolls use the inherent high cost of defense as leverage to force settlements. In the retail business our margins are already thin, and the decision to settle or go to trial and spend millions of dollars litigating what we know is a junk patent has to be weighed against its effect on the business.
It is unfortunate that patent trolls are manipulating the patent process to enrich themselves and their investors at the expense of retailers and the American consumer. That is why we urge the committee to take action against this senseless and needless litigation so retailers can use innovative technologies to bring exciting new products to our customers without the fear and cost of abusive patent troll lawsuits.
We encourage the committee to explore solutions that will curtail these abuses of our legal system, while still protecting rights of patent owners, such as driving patent suits away from downstream users of technology and towards the actual providers, and developing procedural rules to streamline patent infringement actions and reduce their expense.
Sincerely,
Bill Hughes
Senior Vice President, Government Affairs
