Chairman Bob Goodlatte (R-VA)

On September 9, 2015, SIIA’s Senior Vice President for Public Policy, Mark MacCarthy hosted a Hill event with the Chairman of the House Judiciary Committee Bob Goodlatte (R-VA) to urge the immediate passage of patent reform legislation.  SIIA strongly and vocally supports passage of the Innovation Act so that patent trolls can no longer use abusive litigation tactics to stifle innovation and growth of small and large businesses alike.  Chairman Goodlatte reassured the audience that the patent bill would move to the House floor “soon.”

Over 330 businesses and trade associations support the Innovation Act, which would make it difficult for trolls to use unfair litigation tactics to hold up companies to “the tune of billions of dollars,” as Chairman Goodlatte put it at the event. On the subject of those who think the Act might hurt them, the Chairman remarked, “Only those who bring claims with no reasonable basis in law or fact should fear the Innovation Act.”

To fully illustrate the dire need for such patent reform, the event also featured a panel of industry speakers to shed light on their needs for patent reform.

John Boswell, Executive Vice President and Chief Legal Officer from SAS, discussed at length the persistent problem of patent trolling.  He conveyed to the audience the struggle of a larger business having to divert financial resources almost every day in order to fight bogus lawsuits that will suppress growth.  “The problem,” he said, “isn’t getting any better.”  Simply the cost of the discovery process during a lawsuit is several thousand dollars and can make a significant negative impact against a company.

Red Hat’s Vice President or Corporate Affairs and Global Public Policy, Mark Bohannon, further detailed that businesses often suffer from suits brought in the Eastern District of Texas, where patent trolls are highly successful.  The bill’s venue provision would ensure that trolls would not be able to sue in patent friendly areas, like the Eastern District of Texas, when the alleged infringer has no connection to that venue.   He also outlined the other provisions of the bill that would cut back on abusive patent litigation tactics.

Not only do large businesses like SAS suffer from patent trolls, but some of the biggest victims of trolls are smaller businesses.  Danny Zadoff, Managing Partner of Nutritionix, a small business that runs an app that calculates nutrition value in popular foods from restaurants, remarked on how Nutritionix, like other small businesses that deal with trolls, struggled financially due to costly discovery fees from a troll it had to deal with.  This becomes a problem when a small business does not have the money to pay for litigation fees and has to settle for a lower amount which could still halt innovation and ruin its business. In his case, the troll was finally driven away when a larger business with significant financial resources was able to take him on in litigation. He said that after the troll went away, Nutritionix grew dramatically.

Beth Provenzano, Vice President for Federal Government Relations of the National Retail Federation, said that one of the reasons why these smaller businesses end up settling to avoid pursuing the lawsuits is because they do not have the patent counsels to fight trolls effectively.  The National Retail Federation represents over 18,000 businesses that range from small retailers to large multinational chains, and she conveyed that the Innovation Act seeks to fix problems in the current litigation system so that it is fairer for all types of businesses to fight trolls.

The Innovation Act would help to address abusive patent litigation along with all the issues raised by the panelists at Wednesday’s event.  Chairman Goodlatte expects this bill to come to the House floor very soon, and the Senate’s PATENT Act is also expected to arrive on the Senate floor soon.  It is important for this bill to be passed as trolls have cost the U.S. economy over $500 billion dollars over the last 25 years at an estimated $29 billion per year.  It is also important that there is a balance so that those who are not abusing their patents can properly exercise their intellectual property rights.

Congress needs to pass this patent reform bill, and pass it now.

Diane Pinto is the Public Policy Coordinator at SIIA. Follow the Policy team on Twitter @SIIAPolicy.