What do Whataburger, Kroger, and J. Crew have in common? They all hate patent trolls.

July 30, 2013

(Photo by Retailmania)

When I started writing about patent trolls eight years ago, it was hard to get anyone outside the technology sector to care. There were many fewer patent trolls in 2005, and they mostly targeted large technology companies.

A new letter to Congress shows just how much that has changed. More and more companies are facing lawsuits for accidentally infringing other companies' patents. And dozens of them have written to key members of Congress urging them to address the problem.

"Litigation brought by patent assertion entities (PAEs), commonly called trolls, has exploded in size and scope, and now represents a majority of all patent litigation," the companies write. They cite research by Boston University researchers that patent trolling costs the economy at least $29 billion per year.

The letter was organized by Google and other major technology companies, but it includes signatures from a large number of distinctly low-tech businesses. Retail outlets like J. Crew and Macy's signed the letter. So did grocery stores like Safeway and Kroger. And home shopping networks Jewelry Television and QVC.

Even Whataburger, the hamburger chain popular in the south, is demanding changes to the patent system.

"We're a burger company. We don't own any patents. We make hamburgers," says Whataburger general counsel Michael Gibbs. But in the last two years, he says, he's been forced to deal with patent threats.

Gibbs says Whataburger has faced legal threats for using ethernet networking equipment and for putting calorie information on its Web site. And he says Whataburger scuttled plans to offer Wi-Fi access to its customers after learning that a troll had started suing companies that offered Wi-Fi services.

Supermarkets are also up in arms. Erik Lieberman of the Food Marketing Institute says his industry is also affected by the growth of trolls.

"I would say every single supermarket chain has been targeted by patent trolls," Lieberman says. "The biggest chains are being targeted by many trolls in any given year. In the last three years the problem has gotten worse and worse."

"There's a troll out there claiming they have a patent on the rendering of JPEGs," an image format that's popular on the Web, Lieberman says. He says there's a troll that claims to own the concept of sending a text message with an embedded link, something many grocery stores do. Another troll targeting grocery stories claims to own the concept of entering your zip code to find the nearest store. Other trolls claim concepts related to clickable online menus and QR codes.

"Our members are not developing this technology," he says. "All they're doing is using it." But that doesn't shield them from threats by patent holders.

The letter focuses on "business method" patents, which are particularly popular with trolls. In the 2011 America Invents Act, banks convinced Congress to create a new, expedited process to challenge the validity of some business method patents. But the process was extremely narrow, applying only to patents related to the financial services industry.

Last week, Reps. Darrell Issa (R-Calif.) and Judy Chu (D-Calif.) introduced legislation that would expand this program to allow challenges to additional categories of business method patents. Sen. Chuck Schumer (D-N.Y.) proposed similar legislation in May. While the letter doesn't specifically mention either bill by name, it endorses their general approach to the issue.

Trolls "often buy questionable business method patents," the letter says, "and assert them against dozens of diverse businesses that use standard technologies like document scanners and common features of the Internet, like promoting discounts or conducting live web chats with customers."

The Issa/Chu and Schumer proposals are just one of several proposals to deter abusive patent lawsuits. For example, Rep. Peter DeFazio's (D-Ore.) SHIELD Act attempts to deter patent trolling by making it easier for victorious defendants to recover their legal costs from trolls. Companies that signed onto the letter say they favor a multi-pronged effort to address the problem of frivolous patent litigation, including both the Issa and DeFazio approaches.

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