NRF: Patent ‘trolls’ must be addressed

Washington, D.C. – In a statement submitted to the House Energy and Commerce Subcommittee on April 8, the National Retail Federation (NRF) urged Congress to address what it sees as an increasing threat to retailers: patent trolls. Patent trolls are entities that purchase overly-broad patents with the sole intent of suing retailers and other end-users of technology that allegedly infringe on those patents.

French’s comments came in a statement submitted to the House Energy and Commerce Subcommittee, which is examining patent trolls’ use of intentionally-vague demand letters — the initial letters legitimate businesses receive accusing them of patent infringement. NRF described how it sees patent trolls as abusing the patent and legal systems, hampering technological innovation, crowding the courts, inhibiting job creation, and driving up costs for retailers and consumers alike.

“Trolls’ claims not only affect e-commerce applications and the everyday use of technology, but also…the storefront operations of traditional brick-and-mortar retailers,” NRF senior VP David French said. “Some real world examples … cover point-of-sale and inventory control equipment, including; scanning barcodes, printing receipts, the sale of gift cards, and the connection of…a computer or printer to an Ethernet network.

“Trolls target retailers because…they are more numerous than manufacturers and suppliers, and therefore are more profitable to the trolls,” French said. “Trolls also know that retailers have less technological expertise to defend the allegedly infringing products [and] operate on thin profit margins and do not have the resources to fight back.”

NRF data shows that retailers often settle trolls’ claims rather than challenge them in court due to the fact that the average case takes about 18 months and costs roughly $2 million to adjudicate. In response to the growing patent troll problem, which the NRF estimates costs the economy $30 billion a year, NRF supports legislative and regulatory proposals aimed at requiring greater transparency and specificity from the trolls, and stopping the trolls’ abusive and costly behavior before the suit ever reaches a court.

French said NRF supports legislative proposals to have the Federal Trade Commission look into patent troll demand letters under its current authority to investigate unfair and deceptive trade practices.

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