Consumers and business owners alike are feeling the pinch. Since June of last year, inflation is up 9.1%. We haven’t seen inflation this high since the 1980s and there is increasing talk of recession.
Businesses are vulnerable as costs rise across the board. Earlier this year, the U.S. Chamber of Commerce reported that 85% of small business owners are concerned about inflation’s impact. We need to act now to generate economic growth, forestall recession, and mitigate the pitfalls of current economic circumstances.
One certain way to do that is to reverse recent decisions to weaken patent reforms, reforms that have a proven record of generating economic growth. Restoring patent reforms will free innovation and cut loose the drag on the economy caused by bogus patent lawsuits.
“Patent trolls” are shell companies that own weak patents and file unjustified patent lawsuits, most often against small, innovative companies. The companies that troll target must thrive in order to reverse current economic trends.
Trolls do not care that their suits are unjust or that they have a negative impact on the economy. They’re in it for the money.
And they are notorious for filing lawsuits in troll-friendly jurisdictions, counting on friendly judges to rule in their favor. In fact, one judge in Waco, Texas, is currently handling about 25% of all pending patent cases nationwide. His district court went from handling about one patent case per year as recently 2017 to now handling almost 1,000 per year. That’s a blight on the judiciary.
This troll “forum shopping” has become so bad in the U.S. District Court of West District of Texas that at the end of July the chief U.S. District Court Judge in West Texas ordered that all patent cases being filed in the Waco Division of the District be randomly assigned throughout all 11 different court divisions there.
Overstock is continuously harassed by patent troll lawsuits, but not like when we were a start-up. I saw firsthand then how these bogus suits hurt small business and this country.
And consumers are the unknowing victims. According to one study, patent trolls cost U.S. businesses $29 billion annually, and patent trolling has been shown to stifle investment in research and development. Now: Who’s footing that bill, if not consumers?
When served a bogus patent troll suit, small businesses face a no-win scenario: They can fight back, paying massive legal fees, or they can settle out for large amounts – even if they know the suit has no merit and that feeding trolls only encourages their appetite.
It ought to be one of the chief aims of this Administration to deny this national economic drain by hanging a few well-deserved ankle weights on these patent trolls. The businesses they target could then use their resources where they do the best: in hiring, in innovating, and expanding production and sales.
Fortunately, in 2011, Congress gave the U.S. Patent and Trademark Office (USPTO) the tools to act: it passed the America Invents Act (AIA). The AIA enabled the USPTO to establish inter partes review (IPR), a review process to allow expert judges to weed out the low-quality patents, weaponized by trolls.
And fortunately, from 2014 to 2019, it worked. AIA reforms generated an estimated $2.6 billion in direct cost savings by limiting bogus patent troll cases. The reforms also led to an estimated increase of almost $3 billion in gross product and a gain of over $1.4 billion in personal income for the same period.
But unfortunately, there has been recent reform backsliding. USPTO rules have weakened, restricting businesses’ ability to access the IPR process and again giving trolls advantages over innovators. Sadly, businesses are once again stuck between a rock and a hard place: fighting trolls or feeding them.
At this time, we must take every step to spur economic growth and protect businesses contributing to it. That means sweeping the legal landscape of bogus patent lawsuits by persuading the current Administration, the USPTO, and Congress to halt this economic drain by restoring IPR to full strength, as was the intent of the AIA that passed Congress on a bipartisan basis in 2011.
There are hopeful signs this is happening: The USPTO Director recently announced interim guidance and a formal rulemaking process that I hope will help to rebalance our patent system. And Sens. Thom Tillis, R-North Carolina, and Patrick Leahy, D-Vermont, have introduced a bill that is a positive step in providing more focus on patent examination and quality.
Those changes need to be seen through. Getting patent trolls and their lawyers out of the chow line and back on the bench will throw businesses and innovators a much-needed lifeline to spur national economic growth. Let’s get this done.
| File Photo Jonathan Johnson.
Jonathan Johnson is the CEO of Overstock.com