The Internet Association, National Restaurant Association, National Retail Federation and Food Marketing Institute
Patent trolls — a term known more among geeks than the general public — are about to be the target of a national ad campaign. Beginning Friday, a group of retail trade organizations is launching a radio and print campaign in 17 states.
They want to raise awareness of a problem they say is draining resources from business and raising prices for consumers.
Patent trolls, known officially as non-practicing entities, or NPEs, are companies that don’t make or sell anything. They just own patents. They make their money by getting licensing fees from businesses that use technologies covered by the patents they own.
For many years, these “trolls” largely targeted companies that make new technologies and develop software. But, Erik Lieberman, regulatory counsel for the Food Marketing Institute, one of the trade groups paying for the ads, says the patent trolls now target grocery stores, restaurants and clothing shops.
“We are not for the most part developing these technologies,” he says. “We’re simply using them.” Among the other groups behind the ad campaign is the National Restaurant Association and the National Retail Federation. The ad campaign is their way of fighting back against the patent trolls.
The groups’ radio ad turns a geeky topic into a dark drama. It has ominous music and tells a story that sounds like a nightmare for any red-blooded American entrepreneur.
A woman’s voice says, “imagine you start the business of your dreams. You open your doors, work day and night and that one store turns into 10. But then you get a letter from a patent troll.”
Then, the ad uses a dark, creepy male voice to represent the troll who comes to ruin your dreams. The troll says it’s got a patent on something really vague and general like “The store locator map on your website. Either you pay us $100,000 or we’ll sue you for everything you’ve got.”
It’s usually cheaper to pay than go to court, even if the patent isn’t good.
The print ad explains a similar situation and it’s got a picture of very ugly-looking troll.
The Food Marketing Institute’s Lieberman says trolls are “posing a major barrier to entrepreneurship in this country.” Business are paying a lot of money to settle with these trolls, he says. “The billions of dollars that we’re facing in cost, many of those get passed on to consumers, so this is a consumer issue too.”
As an example, Lieberman cites a troll using a patent for JPEG files to target stores like J.C. Penney, Foot Locker, American Eagle Outfitters and Macy’s. If you’ve looked at photos online, or gotten a photo in an email, it’s often a JPEG file. Lots of business use these files to send out promotional photos or post them on their websites. Lieberman says this troll wants all the companies that use JPEG files to pay up.
President Obama has said that companies like this are abusing the patent system. And Congress has several legislative proposals on the table to try to curb the business of trolls.
The anti-troll ad campaign is asking people to call and write their congressmen to do something about bad patents.
But that’s easier said than done. Patent attorney Andrew Williams says even if there are some bad actors out there, there are a lot of perfectly good patents and inventors who deserve to get paid for their ideas. “The question is just how do you deal with it in Congress? How do you legislate to, as they say, ‘stop bad patents’?” he says.
Williams notes that a recent report from the Government Accountability Office found that only 20 percent of patent litigation was brought by so-called trolls.
Both Democrats and Republicans agree it’s a problem — a rare case of harmony in Washington. The trade associations hope that by putting a little spotlight on it the two parties might feel pressure to actually do something.