Washington—The Obama Administration’s efforts to curtail “patent trolls,” which often target retail businesses, is being applauded by retail industry associations, such as the National Retail Federation (NRF).
In an attempt to crack down on the growing threat from so-called “patent trolls,” President Obama on Tuesday issued executive orders to curb abuses and called upon Congress to take tougher steps to protect U.S. businesses.
Typically “patent trolls” are companies which buy obscure patents for things not invented by them, then threaten to sue companies using the technology involved unless they pay a licensing fee.
The White House claims lawsuits by so-called patent assertion entities have more than doubled in the last two years costing American businesses some $30 billion a year. A 17-page report by White House technology and economic officials released Tuesday cited estimates that such firms threatened more than 100,000 companies with patent infringement suits in 2012.
Retailers a Major Target for Patent Trolls
The NRF said retailers had seen a rising number of patent lawsuits in recent years, about 40% of them from trolls. When cases go to trial, the “trolls” lose more than 90% of them, but many companies settle out of court to avoid expensive and lengthy legal battles, which cost an average of $2 million and take 18 months to settle.
“Retailers have become one of the largest groups of non-tech companies targeted by patent trolls,” said Mallory Duncan, NRF senior vice president and general counsel.
Retailers are among the most frequent targets thanks to the industry’s increasing use of cutting-edge innovations, especially in online and mobile retailing, Duncan said.
In one example, more than 40 online retailers whose smartphone apps include a link to privacy policies posted on their web sites have been sued or threatened. In another, companies that scan a paper document into a computer and then attach it to an e-mail have been asked to pay a fee. Even adding an item to an online shopping cart and checking out has been challenged as patent infringement.
“Retailers are using precious capital resources to fight or settle infringement claims that they should be using to invest in their businesses and create jobs,” Duncan said. “This is an abuse of our nation’s laws that needs to be stopped.”