PLANO, Texas (Legal Newsline) – A senior counsel for J.C. Penney & Co. has all but
given up waiting on the federal cavalry to arrive and protect her client from
patent trolls. Instead, she and others have joined a community of patent-protectionist
businesses in an effort to ward off what they say is a growing problem.
In a blog article titled Retailers Need to Join Forces to Solve Patent Troll Problem posted
on the Chain Store Age website on March 13, attorney Diane K. Lettelleir discussed
how trolls were targeting her client.
In speaking with Legal
Newsline, she elaborated a bit more on her assertion.
is rarely sued for patent infringement as a
result of the products it sells,” Lettelleir said. “Patent trolls typically sue
as a result of technology used in operating its business – everything
from Ethernet-enabled hardware to encryption technology to loading value on to
gift cards to store locator functionality on its website.”
Her observation concurs with the opinion of
IP Watchdog columnist and patent attorney Karl Fazio, who writes that the
Achilles' heel for businesses is their use of third-party software tailored
for use in network platforms handling the firm’s mundane base computing and
Fazio writes, “There has been no shortage of such
litigation due to the glut of vague and ambiguous software patents directed to
basic computing technologies. These broad, vague patents have become glaring
targets for trolls, who are eagerly buying them up and asserting them wherever
they can. As a result, companies are being sued for patent infringement for
things that aren’t directly related to their end products and services.”
Government responses have, according to Lettelleir,
fallen short. The change in administrations has not brightened the prospects
for action either.
“The current administration has not identified patent
reform as a priority,” noted Lettelleir.
So she advised her client to join LOT Network, a consortium of businesses who agree to defend each other against patent infringement suits filed by a patent
holding company (PHC), patent assertion entity (PAE), or a non-practicing
entity (NPE); known collectively as patent trolls.
Essentially these trolls are either a person (usually
a lawyer) or an entity (usually a law firm) that purchases voluminous amounts of
patents for a variety of products that it does not produce or services it does
not provide, for the sheer purpose of filing lawsuits.
Ken Seddon, CEO of LOT Network, spoke with Legal Newsline about what his company,
started in 2014, does about the patent troll problem.
Essentially, LOT consists of an ever-growing consortium
of companies (now up to 130), made up of everything from start-ups to giants
like Google, who agree to respect each other’s patents as is normal business practice.
If a patent from a member of the community lands in the hands of a troll “then
and only then do the other members of the community get a free license to that
patent,” stated Seddon.
In the words of LOT’s CEO, it is a herd-immunizing
procedure designed to cut out the legs of trolls from underneath them.
According to Seddon, businesses pay $29 billion a year
in litigating, licensing and settling with patent trolls, with an average per
business cost of $3.2 million.
Lettelleir writes that these high costs are passed on
to the consumer in the form of higher prices, but that patent trolls also
stifle innovation because of the high cost and rate of litigation, which reportedly is growing at 20 percent per year.
The main source of patent trolls, according to Seddon,
appears to be operating companies themselves. Seddon told Legal Newsline that “81 percent of troll patents originate from
operating companies…They really have themselves to blame for the patent troll