Running a small business requires you to wear a lot of different hats, but one I never, ever expected to wear is that of congressional lobbyist. That’s just what Diane, myself, and other members of the Application Developers Alliance did last week when we spent the day rushing from meeting to meeting on Capitol Hill to push for Congress to do something about the damage patent trolls are inflicting on businesses, in particular small software companies. It was a grueling day and my poor dress shoes, which often sit in disuse in my closet for months on end, were simply not up to the task.
Patent trolls are a scourge upon the independent app developer community, so I thought it might be a good idea to summarize where things currently stand in Washington and discuss what developers can do to help ensure meaningful legislation that addresses this problem is ultimately passed and signed into law.
My shoes may have given up, but we did’t.
A Brief Explanation of Patent Trolls
For those unfamiliar with patent trolling, it is, quite simply, a form of legalized extortion. Patent trolls take advantage of the fact that it is relatively cheap and easy to obtain vague, obvious, and overly broad-patents from the United States Patent and Trademark Office (USPTO). Many of these “bad patents” cover things that people have been doing for years (sometimes decades and even centuries) before their so-called “inventors” came up with the idea. Such patents should never have been granted in the first place. Unfortunately, the USPTO is extraordinarily dysfunctional and junk patents are routinely issued. It’s worth taking a look at the Electronic Frontier Foundation’s Stupid Patent of the Month posts for concrete examples of some of these absurd patents.
Patent trolls use these bad patents to file or threaten to file infringement lawsuits against innocent businesses. Patent infringement lawsuits are notoriously expensive to defend. The discovery phase alone can cost hundreds of thousands of dollars and it generally takes well over a million dollars to see a trial through to a jury verdict. Small companies like ours simply cannot afford to defend themselves against a frivolous patent infringement lawsuit. Even if a company can afford to go to trial, it is a huge suck on time, money, and other resources that could be better spent.
Trolls know this and exploit it by demanding settlements that are less than the financial cost of litigation. Business owners are left with three bad choices: pay the extortion for a wrong they never committed, enter into expensive litigation, or close up shop. Make no mistake, despite their claims otherwise, patent trolls are not interested in protecting inventors and fostering innovation. They simply threaten and intimate hard working entrepreneurs for the sake of a quick buck. There is no difference between what they do and a mob thug that walks into the corner store and threatens to take a baseball bat to the shelves unless they are paid “protection” money.
The State of Things in D.C.
Perhaps the most pleasant surprise from our day on Capitol Hill was just how aware and engaged the members of Congress and staffers we met with were on this issue. There is a widespread, bipartisan acknowledgement that patent trolls do serious harm to real people and businesses and something needs to be done – quickly.
The current prominent proposals in Congress attempt to attack the problem on two fronts. This first approach addresses the litigation side by requiring more up-front due diligence from patent holders in order to file a lawsuit, putting limits on some of the shenanigans plaintiffs use to run up the costs on defendants to force them to settle, and adding significant financial risk for filing a frivolous infringement lawsuit. The judiciary committees in both houses of Congress are tackling this part of the problem with the Innovation Act in the House of Representatives and the PATENT Act in the Senate.
The second approach tries to deal with the demand letter problem. The Energy and Commerce committee in the House is attempting to do this with the TROL Act, which quite frankly is weak sauce and actually does more harm than good by nullifying state statutes that have more stringent requirements. From what we’ve been told, the PATENT Act in the Senate will contain meaningful reform on this front as well by including civil penalties for trolls that do not provide specificity to backup their allegations when demanding that businesses pay up. It will also allow states to enact or keep their own laws with even stricter requirements. This might end up being a better approach than the House bill, which is virtually toothless and full of loopholes. NOTE: The “bad faith” portion of the TROL Act was amended during markup to address one of the concerns mentioned in the linked article.
By and large, there is a sense of urgency in both houses of Congress. An advisor to the Senate Judiciary Committee told us the PATENT Act is going to move “really fast” through committee. The House Energy and Commerce Committee was holding a markup meeting for the TROL Act while we were in Washington and the House Judiciary Committee plans on entering the markup phase for the Innovation Act in the coming weeks. Those on the House side are fairly confident the Innovation Act will pass with broad bipartisan support in a form very similar to the version that passed the House in 2013.
Passage is less certain in the Senate, where it is easy to hold up legislation. Some prominent Senate Democrats oppose key parts of the proposed reforms and it is unclear if Mitch McConnell, the Republican Senate Majority Leader, will take up the charge to push it through if and when the PATENT Act makes it out of committee.
While there are very real reasons to be concerned at the prospects of meaningful reform passing the Senate, there is also reason for hope. The pro-patent reform wing learned a lot of lessons when a reform bill was killed in the Senate Judiciary Committee during the previous congressional term. The PATENT Act is designed to be more palatable across a broad political spectrum and you can see this from the bill’s sponsors (Senators Grassley, Leahy, Cornyn, Schumer, Lee, Hatch, and Klobuchar), who collectively span the bulk of the Left-Right political continuum.
Root Causes and Political Reality
I mentioned earlier in this post that low quality patents are the foundation on which patent trolls build their parasitic businesses. These bad patents have led to a host of other problems as well, so it makes sense to think Congress should really be focusing its efforts on providing cheap and efficient avenues for invalidating existing bad patents and keeping new junk patents from being issued, right? Sure, but that’s not going to happen. At least not anytime soon.
When the Innovation Act passed the House the first time in 2013, I complained that it didn’t go far enough. I was naive. A lot of political capital was spent in passing the very minor reforms in the America Invents Act in 2011. The wounds from those battles are still fresh in the minds of those that wander the halls of Congress and there is very little will to reopen them. As much as I would like to see fundamental reform of the patent system, putting such a thing into the legislation that is currently pending would effectively be a poison pill. Some of its supporters would switch sides and oppose the reform. It would also bring in some very large and politically well-connected opposition that has thus far remained on the sidelines.
We cannot let our desire for perfection destroy our chance to do something good here. It took me a while to learn that lesson. Heck, I’m still learning that lesson.
Developers: It’s Time to Get Involved
If you are an app or web developer, especially an indie like me and Diane, then I’m talking to you here. It is not a matter of if, but when a patent troll will come knocking at your door. The PATENT Act and Innovation Act take away many of the incentives in the patent trolling business and it is in your interest that these bills are passed without being watered down. I encourage you to get involved for yourself and for our industry as a whole.
You can start by writing and calling your senators and your representative in the House and letting them know your views. But I encourage you to take it further. Ask for face to face meetings with your House rep and senators, or at the very least, their legislative director or chief of staff.
Even better, take a look at joining the Application Developers Alliance and other industry advocacy groups, such as the Electronic Frontier Foundation and Engine Advocacy. Let them know you are concerned about patent trolls and ask them to help you arrange meetings with the appropriate people in Congress so you can tell them your story. And don’t think that you have to have been a victim of a troll to add to the discussion. This isn’t only about those who have been hurt by trolls. It is also about the things that never were because of them. Maybe you held back on products or features because they might make you a ripe target for trolls targeting particular groups of developers, such as Lodsys. Or maybe you didn’t invest in a project or company because you didn’t want to risk your money being wasted fighting trolls instead of building products and hiring people. Congress needs to hear those stories of the things that never happened, the innovation that was squelched.
This fight is far from over. There are any number of ways these bills can be killed or neutered and that will surely happen if we all just sit back and hope for the best. Patent abuse is an esoteric subject and those that oppose meaningful patent reform (mainly the pharmaceutical industry, trial lawyers, and universities) have more experience and resources than we do when it comes to lobbying the government. We need to remind our representatives that we’re here – all day, ever day – until meaningful reform is enacted into law. And we need as many people doing that as we can possibly get to counter a formidable opposition.
I’m asking you for help. Like you, we have customers waiting for updates and new software that I desperately want to get out the door. I hate the fact we have to spend time on this. But these trolls put our businesses at risk and we’ve never had a better chance at stopping this nonsense than we do right now. So put down the keyboard, pick up a sword, and and join the fight.