It's been a few weeks now since Chairman of the House Judiciary Committee Bob Goodlatte, R-Va., drafted the Innovation Act, a bill that hopes to dismantle the act of patent trolling. With a few reforms, such as increased transparency in infringement claims and shifting court fees to the losing party, the bill would come close to effectively crippling the innovation parasites. In a letter dated Nov. 6, more than 30 investors – including a few here locally – penned a letter to lawmakers on Capitol Hill urging them to pass comprehensive action against patent trolls, a problem that is bleeding the life out of America's free enterprise system.
You local representatives might not respond to your mail, but there's no way members of the House and Senate could pass up a document signed by the likes of Mark Cuban, Reddit Co-founder Alexis Ohanian, Y Combinator's Paul Graham and our own Steve Case. Devin Talbott, who is a managing partner at Chevy Chase's Enlightenment Capital, also signed the letter. Those pioneers of modern innovation and technology investing have the clout – as well as the money – that when they speak, you listen.
They didn't necessarily downplay any of the several proposals of action being taken against patent trolling by Capitol Hill – they just expressed that Congress needs to follow through and put them in to action already. "Young, innovative companies are increasingly threatened and targeted by patent troll lawsuits. In fact, the majority of companies targeted by patent trolls have less than $10 million in revenue," the letter reads. "As a result, Congress and the Administration are considering multiple reform proposals. None alone will fix the problem, but together they will make a substantial dent in what one famous troll recently called 'a new industry.'"
Additionally, if Congress had any trouble understanding what these investors wanted, they spelled it right out for them what new policy should be enacted to stint trolling:
- Make it easier to efficiently review patents at the Patent Office, as an alternative to litigation.
- Increase transparency by requiring patent trolls to specify, in complaints and demand letters, which patent and what claims are infringed, and specifically how the offending product or technology infringes.
- Limit the scope of expensive litigation discovery.
- Require patent trolls to pay legal fees and other costs incurred by prevailing defendants.
- Protect end users of technology (e.g., wi-fi, printers and scanners, and APIs) from being liable for infringements by technology providers.
For the most part, these same points were addressed on Goodlatte's Innovation Act when it was introduced in late October. This letter from Case and friends seems more an act of urgency and solidarity to show how firmly they stand behind the issue. After all, it's an enormous problem – one that came with a $29 billion price tag in 2011. And here in D.C., just today the Senate jumped further into the fight, holding a hearing on Capitol Hill today. While it was a move in the right direction, one revelatory nugget from Application Developers Alliance President Jon Potter hit home pretty hard: about one third of D.C. startups have received demand letters from patent trolls. But under the current legislation and with little capital, there's nothing they can do but live in fear and hope they go away.
