White Castle VP: Patent trolls have 'made us really gun-shy'

By Jessica M. Karmasek | Feb 12, 2014

COLUMBUS, Ohio (Legal Newsline) -- Jamie Richardson, the vice president of corporate relations at White Castle System Inc. -- the fast food hamburger chain known for its "sliders" -- never thought his company would be the target of so-called "patent trolls."

Patent trolls -- the derogatory term given to some 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.

Banks and tech companies like Google and Apple, yes. But a 93-year-old, family-run restaurant chain?

"We never expected we'd encounter something like this," said Richardson, who has been with the company for 15 years.

Richardson said it started last year when the company received a letter about a QR, or quick response, code it had put on some of its packaging as a promotional tool.

"Next thing you know, we had a letter demanding large sums of money, saying we were encouraging our customers to infringe on this company's property rights," he said.

Then, another letter came -- this time, telling the Columbus-based White Castle that it was violating a patent by giving out a link to a news story in an email correspondence to customers.

But this letter wasn't a demand letter. It didn't even give the restaurant chain an option to pay up and settle.

"They basically said we're a part of this lawsuit. We weren't even given an option," Richardson said Monday.

"Talk about incredibly aggressive."

As if that wasn't bad enough, White Castle got hit again by a third patent assertion entity. This time, over their digital menu boards.

Such boards don't require an employee to physically change out menus. Instead, the menus are updated via the company's main headquarters.

"We received a letter basically demanding payment not for the technology in the board itself but the process of our sending the information out to the menu boards," Richardson explained.

The letters, he said, all were very difficult to decipher -- a common complaint of those targeted.

"Let's just say, they don't come with a Rosetta Stone," he said. "They make it really difficult to even understand the nature of the claim -- to the point you can't tell if it's legitimate or not.

"And while we have incredible legal counsel, we only have two attorneys, not 22, like some companies."

So that means seeking outside counsel specializing in patent law, Richardson said.

"And, of course, that's costly," he said.

Not only have the incidents been an unexpected hit to the company's budget, but they've also forced it to reevaluate its marketing strategies.

"It's made us really gun-shy, to be honest," Richardson said.

"We're a family-owned business. We don't have the global resources that some companies do. So it's really slowed us down. We're definitely a lot more reluctant to try new technology."

It's even affected the company's relationships with third-party providers, such as advertising agencies, Richardson said.

"Now, it's not just about the caliber of the message or the marketing strategy itself, but it's a matter of worrying about, 'what happens if we get a patent troll?'" he said. "Now, we have to ask if these third parties are willing to indemnify us against possible future lawsuits.

"It really stifles creativity."

In November, Richardson testified on behalf of the National Restaurant Association at a hearing before the U.S. House's Energy and Commerce Subcommittee on Oversight and Investigation titled, "The Impact of Patent Assertion Entities on Innovation and Economy."

While Richardson said White Castle supports U.S. Rep. Bob Goodlatte's Innovation Act -- which overwhelmingly passed the House in December and is now being carefully considered by the Senate -- he noted his company also has a "deep reverence" for intellectual property rights.

"Hopefully, lawmakers can get to the core issues without being burdensome to innovators and inventors," he said. "We recognize there is a delicate balance.

"But one thing we know is that these trolls are hiding under a bridge. Congress really needs to put the burden of proof back on these organizations that, we think, are being irresponsible."

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

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