Retailers group, pointing to prolific patent lawsuit filer, calls for reform

By Jessica M. Karmasek | May 13, 2015

WASHINGTON (Legal Newsline) - A leader of the largest retailers group in the nation says a Texas non-practicing entity’s prolific and continued filing of patent infringement lawsuits against retailers is further evidence that reform is essential.


“I think it just speaks to need for multifaceted patent reform legislation,” said Beth Provenzano, vice president of the National Retail Federation.


Provenzano, in a statement Tuesday, called Plano-based eDekka a patent “troll” and said NPEs like them are a “scourge” on businesses across the United States and Main Street merchants.

She said retailers, in particular, have been hit hard by bad actors like eDekka.


“We’ve seen the retail industry become a bigger and bigger target over the years as we adopt and implement more technology,” she explained.


Last year, eDekka alone filed more than 100 patent lawsuits -- most, if not all, against retailers.


In recent weeks, the NPE has filed more than 60 lawsuits in the U.S. District Court for the Eastern District of Texas against various retailers, including Destination Maternity, Adidas, Columbia Sportswear, Birchbox, Asics, Fathead, Groupon, Guess?, Hallmark, Hugo Boss, Forever 21, Mrs. Fields, MARS and Lucky Brands.


The company claims in its lawsuits that the retailers’ websites include a “shopping cart” function that infringes on its U.S. Patent No. 6,266,674 entitled “Random Access Information Retrieval Utilizing User-Defined Labels.”


The patent, issued to eDekka in 2001, covers a method for utilizing user-defined labels to retrieve information. It does not appear, at first glance, to have anything to do with the Internet.


In looking at drawings attached to the complaints, it looks more like a pager of some sort.


“There was a study that came out in 2012 saying retailers are targeted more than tech companies,” Provenzano said. “And I think it’s because so many more of us are using technology that someone else created.”


Not to mention, most retail companies don’t have in-house patent counsel.


“Just to investigate a claim is such an expense,” she said.


In that sense, Provenzano said retailers, especially, are being taken advantage of.


“These entities know retailers don’t develop the technology themselves, and so they’re not the best to defend themselves against the alleged infringement,” she explained.


Provenzano said comprehensive patent reform legislation is needed to make it more difficult for bad actors like eDekka to target retailers and other businesses.


The NRF, which helped found United for Patent Reform coalition, supports the House-introduced Innovation Act and Senate-introduced PATENT Act.


“I think the Innovation Act and PATENT Act are strong, targeted approaches that address the current problems in patent litigation,” Provenzano said.


The Innovation Act was reintroduced in February. It requires:


- Plaintiffs to disclose who the owner of a patent is before litigation, so that it is clear who the real parties behind the litigation are. Goodlatte says this will ensure that patent trolls cannot hide behind a web of shell companies to avoid accountability for bringing frivolous litigation;


- Plaintiffs to actually explain why they are suing a company in their court pleadings;


- Courts to make decisions about whether a patent is valid or invalid early in the litigation process so that patent trolls cannot drag patent cases on for years based on invalid claims.  This prevents invalid patents from being used to extort money from retailers and end users;


- The U.S. Judicial Conference to make rules to reduce the costs of discovery in patent litigation so that patent trolls cannot use the high costs of discovery to extort money from small businesses and entrepreneurs; and


- The U.S. Patent and Trademark Office to provide educational resources for those facing abusive patent litigation claims.


Also, when parties bring lawsuits or claims that have no reasonable basis in law and fact, the Innovation Act requires judges to award attorneys’ fees to the victims of the frivolous lawsuit.


The bill allows judges to waive the award of attorneys’ fees in special circumstances. This provision applies to both plaintiffs and defendants who file frivolous claims.


The measure also creates a voluntary process for small businesses to postpone expensive patent lawsuits while their larger sellers complete similar patent lawsuits against the same plaintiffs, to protect customers who simply bought the product off-the-shelf.


The PATENT, or Protecting American Talent and Entrepreneurship, Act was introduced earlier this month and would clarify pleading standards; protect end users; reasonably limit early discovery; create more risk for bad actors; curb abusive demand letters; and increase transparency.


Both measures currently are in committee.


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

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