LEGAL NEWSLINE

WASHINGTON (Legal Newsline) -- A group of businesses has joined together in asking federal lawmakers to fix the nation's patent laws and put an end to patent trolling.

On Monday, more than a dozen trade associations, companies and small businesses announced they have formed the Main Street Patent Coalition, or MSPC.

The non-partisan coalition, made up of restaurants, retailers, hotels and grocers, is asking Congress to pass what it describes as "comprehensive, common sense" patent reform legislation.

The legislation would:

- Eliminate trolls' ability to hide behind multiple "shell" corporations;

- Disarm trolls by improving patent quality and providing a way to fight bad patents;

- Make it easier to punish trolls that send fraudulent and abusive shakedown demand letters;

- Protect end users from troll lawsuits based on infringements by intermediary manufacturers and producers; and

- Make trolls pay when they sue companies frivolously and stop "runaway" litigation costs.

The MSPC argues that the country's current patent system, intended to protect the rights of inventors and other small businesses, has been "corrupted" and "abused" by patent trolls.

Patent trolls -- also referred to as "patent assertion entities" -- are companies that purchase groups of patents without an intent to market or develop a product. The companies then target other businesses with lawsuits alleging infringement of the patents they bought.

The coalition contends these trolls leverage poor quality patents and the threat of costly litigation in an effort to extort money from small businesses, especially.

"Patent trolls pose a great and growing threat to small, main street businesses of every industry in America," said Michael Meehan, MSPC's manager and the president and CEO of VennSquared Communications, a leading boutique communications firm.

"What was once an annoying pest to men and women working to build a business is now a full-scale economic virus."

In 2011, 90 percent of companies facing patent suits were small businesses and the cost of patent trolls to the U.S. economy was $29 billion, according to a Boston University study.

"Thousands of main street businesses, in every corner of the U.S., shell out licensing fees in response to vague and deceptive demand letters from patent trolls," Meehan said.

"Small businesses are the economic engine of the United States, but they are often the least able to defend themselves against predatory patent trolls.

"We have to give them the tools they need to fight back and to put trolls out of business."

MSPC's members include: National Restaurant Association, National Retail Federation, The Emob, American Hotel and Lodging Association, National Grocers Association, International Franchiser Association, Application Developers Alliance, National Association of Realtors, Retail Industry Leaders Association, National Council of Chain Restaurants, American Association of Advertising Agencies and American Gaming Association.

A number of measures have been introduced by federal lawmakers in recent months in an effort to improve patent laws, including Sen. Patrick Leahy's Patent Transparency and Improvements Act of 2013 and Rep. Bob Goodlatte's Innovation Act.

The Innovation Act was approved by the House in an overwhelming bipartisan vote of 325-91 last month, and has since been sent to the Senate.

Leahy's bill was assigned to a congressional committee in November. It must be considered before it is possibly sent on to the House or Senate as a whole.

The biggest difference between the two measures is that Leahy's bill does not include the provisions that would force patent infringement case management rules on the district courts or procedures as to pleading, discovery timing and limits, cost-shifting related to discovery or loser-pays fee shifting.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.