Legislation introduced in the house on Oct. 25 might eventually bring relief to FIs and ATM industry vendors that have been plagued by baseless "patent troll" lawsuits. The Innovation Act (H.R. 3309) authored by Judiciary Committee Chairman Bob Goodlatte, R-Va., would waive fees and introduce transparency that would make it easier to identify frivolous legal actions.
CUNA News Now quoted a letter in support of the bill that the association sent to legislators:
"Financial institutions of every size have been targeted by non-practicing entities, often referred to as patent trolls, who in most cases assert low-quality business method patents through vaguely worded demand letters ... Components of the Innovation Act could help alter the business model of NPEs by removing some of their financial incentive to assert low-quality patents in the hope of quick settlements."
The letter also cited statistics showing that patent troll suits are growing in number. It said that last year alone, trolls sued more than 7,000 defendants and sent threatening letters to thousands more, abuse that cost the U.S. economy $80 billion in 2011, and cost companies $29 billion in direct payouts.
The Electronic Frontier Foundation reported that on Oct. 30, Sen. Orrin Hatch, R-Utah,introduced the Patent Litigation Integrity Act (S. 1612). The EFF, a nonprofit civil liberties organization, sent a letter applauding the Senate bill; the letter is excerpted below:
The NPE business is one of litigation and licensing, not creating and providing products and services. Thus, the high costs of litigation are baked into their very business model. This is not true of the productive businesses targeted by NPEs, particularly smaller ones. And, in fact, it is these smaller businesses that bear the brunt of NPE litigation. More than half of the defendants in NPE suits make under $10 million annually.
This problem will not be fixed until those facing threats from NPEs can fight back. Currently, the costs associated with taking up that fight in federal court are staggering. If taken to verdict, defending a lawsuit can easily cost nearly $3 million, according to findings by the American Intellectual Property Law Association. And when these cases make it to judgment, the NPE only wins a shockingly low 9.2 percent of the time.
The Patent Litigation Integrity Act would remedy a core component of the patent troll problem. It would give those facing NPE threats the tools necessary to fight back while also giving NPEs a disincentive to bring harassment suits. Importantly, the bill would not affect any party bringing a meritorious suit. Currently, the system is skewed heavily in favor of the NPEs; the Patent Litigation Integrity Act would rectify this problem.
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