Our country’s current patent system rewards confusion, rather than transparency. It is riddled with bad record keeping, and plagued by shady businesses practices that transfer patent ownership to shell companies that launch baseless lawsuits and kill innovation. So why is one-time presidential candidate Rick Santorum backing patent trolls under the cover of the U.S. Constitution?
In a recent editorial Santorum, former Republican senator from Pennsylvania, argued against the patent reform legislation now pending in Congress. “Our Founding Fathers recognized the importance of intellectual-property protection in a thriving, free economy,” Mr. Santorum, now chairman of Patriot Voices, wrote, “which is why they enshrined these rights into the Constitution.”
Under current law, patent holders can blanket businesses with lawsuits without specifying the products they think infringe their patents — or even which patent claims they are asserting. Deciphering these complaints requires a long and expensive discovery process. Rather than pay a fortune in legal fees to reach that stage, many defendants choose to settle out of court. In fact, those patent holders — better known as “patent trolls” — expect precisely that.
Patent trolls drain more than $1.5 billion from the U.S. economy ever week, and 90 percent of patent troll victims are small businesses. Pending patent reform legislation — known as the Innovation Act — would help protect legitimate business owners and startups, and promote and strengthen the very protections and freedoms that Santorum champions.
The Innovation Act would make the information about patents more transparent. Among its many benefits, the bill would require those who claim patent infringement to detail the patents they own and explain which parts of those patents are being infringed. More, the bill would cut back on early filing documentation — an effort to limit costs incurred early in the case. And the bill proposes a “loser-pays” provision, which would require the losing side in patent infringement cases to pay the costs incurred by the winning side.
Such openness and common-sense protection would protect genuine patent holders — our country’s real innovators and entrepreneurs — while helping combat the scourge of lawyers and shell businesses that file ridiculous patent claims. Patent trolls claim infringement on such widely available products or services as copiers, medical equipment, and coffee shops that provide access to Wi-Fi networks. Ridiculous or not, their victims face the same extortionist dilemma — pay up or start fighting.
Santorum writes that the Innovation Act would “reward some powerful tech companies at the expense of the American worker and entrepreneurship.” But in most cases, a patent troll is not an inventor so much as an opportunist claiming a patent on widely used, previously available technology. This happened to Macy’s, which was sued for using basic search engine technology.
Patent reform isn’t just for the big tech players like Cisco, Google and Adobe. Patent trolls regularly shake down big companies in nearly every sector of the economy, but 90 of patent extortion victims are small businesses. Meaningful reform like the Innovation Act would help all American innovators, whether they are an individual inventor or a major corporation, fight back against patent extortion and protect their intellectual property rights. In 2013, the hamburger chain White Castle was hit with a lawsuit after it started using digital menu boards. The restaurant was also sued for sending links to its website via email. As Fortune noted, the chain “is now less inclined to use innovative e-commerce technology developed by startups, opting instead for off-the-shelf solutions developed by larger companies that would bear the burden of any litigation.”
Santorum is right about one thing — intellectual property protection is vital to a free and thriving economy. One way to help ensure that freedom and protect our small businesses and innovation is through transparency in the patent litigation process. Congress can deliver better protection and strengthen our economy by passing the Innovation Act this year.
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