NRF: Retailers urge Congress to act on ‘patent trolls'

Washington, D.C. -- Retailers, advertisers and marketers called on Congress today to involve the Federal Trade Commission in efforts to eliminate frivolous patent lawsuits, saying vague letters sent out by “patent trolls” demanding licensing fees amount to unfair and deceptive practices. Patent trolls are companies formed to develop potential patent-infringement lawsuits without manufacturing their own products.

Larry Sinewitz, executive VP of 11-unit multichannel electronics retailer BrandsMart USA, testified on behalf of the National Retail Federation and the Stop Patent Abuse Now (SPAN) Coalition during a Nov. 7 Senate Commerce Committee hearing on patent abuse. The hearing focused on “demand letters” sent by patent trolls, which critics say attempt to extort large amounts of money while providing little information about the patent involved or the alleged infringement.

Sinewitz said his company has received six demand letters in the past several years, and just initially consulting a patent attorney to determine what claims are being made can cost a company tens of thousands of dollars. During the past 10 years BrandsMart has spent $500,000 on legal fees and settlements with patent trolls, he said.

Sinewitz called on lawmakers to include a provision in pending patent reform legislation that would require the FTC to investigate demand letters and use its existing authority to regulate unfair and deceptive trade practices to “rein in bad actors that target Main Street businesses.”

“Requiring greater and truthful disclosure will provide greater certainty to businesses, saving them time and money as they investigate the person or entity asserting the patent and determine the overall merits of the infringement claim,” he said.

Sinewitz said claims seen from patent trolls involve not just e-commerce applications but everyday business operations and practices of brick-and-mortar stores, such as scanning barcodes, printing receipts, the sale of gift cards and the connection of equipment such as computers and printers to an Ethernet network.

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