MPHJ Technology Investments, a company based in Delaware, doesn’t provide any goods or services. But over the past several years, it has sent more than 16,000 letters to businesses throughout the country threatening lawsuits for infringing on one of its patents.
As it turns out — according to MPHJ — companies need to pay $1,000 per employee if they have ever scanned a document directly to e-mail.
Patent reform is brought up before Congress almost every year, but complaints have just recently gained traction thanks to egregious stories of so-called “patent trolls” — groups that make threats of filing lawsuits against companies with the hopes of making money off settlements.
While the Federal Trade Commission has taken its first steps to fight off trolls (in a case with MPHJ), businesses across the board are demanding that Congress protect them from the trolls, more politely called “patent assertion entities.” Still, the issue has sparked a heated debate on how best to protect intellectual property while also preventing frivolous lawsuits.
It’s one of the rare issues receiving bipartisan attention — Republican leaders in Congress and the president have pushed for legislation that would make it harder for trolls to make threats. That’s probably because these trolls are easy to dislike. Home Depot has been sued for something as simple as using WiFi communication to help stock its shelves. Google, Adobe, Yahoo and others have been sued for using computer software that prevents piracy. Small companies are also affected, and they often don’t have the resources to swat away litigators.
It’s also pressing since patents are enormously important. The U.S. Patent and Trademark Office estimates that intellectual property-intensive industries contribute more than $5 trillion to our GDP — translating to 40 million jobs and a third of the entire economy.
The problem is that not everybody agrees what patent reform should look like. A bipartisan group of House lawmakers is working on a bill — called the Innovation Act — that would raise the bar for what is considered a patent violation and shifts courtroom fees — possibly to the loser of a case — to discourage litigation.
But that approach has been criticized by people who claim that some “frivolous” patent battles are in fact legitimate. Universities, for example, often need to litigate to protect the start-ups based on their research. They then use money they win in cases to further support innovation.
A group of senators (three Ds and two Rs) are supporting their own reform proposal — called the STRONG Act — designed to change the rules that the U.S. Patent and Trademark Office uses to review contested patents. The idea is to make it more difficult for trolls to claim intellectual property rights on trivial technology (e.g., scanning documents to e-mail).
The Founders considered patent protections so important that they enshrined them in Article I of the Constitution. No matter the delicacy with which legislation is crafted, reform in any shape would mean tinkering with what is often termed the fuel of the economy: innovation. The prospect makes many nervous. Today, any entrepreneur looking for seed money from investors would be remiss to not first secure some form of protection for their proprietary technology, and slowing or changing the process would mean that new tech, pharmaceuticals or other potentially critical products could take much longer to come to market.
That’s why what we do with our patent system is worth a vigorous and open discussion. What are the possible consequences of patent reforms? What is at stake if we make it harder for patent holders — even the non-trollish kind — to defend their claims? And where will this reform take place: in Congress, the executive branch or the courts?
Over the next few days, we’ll hear from: