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Patent trolls are sucking the vitality out of innovative Alabama businesses

By April 2, 2014No Comments

By Jeff Gale

TicketBiscuit CEO

Patent trolls, also known as non-practicing entities, or NPEs, are extorting businesses of all sizes and industries in our state and nation, and are significantly hampering economic growth for their own gain.

I am encouraged by the growing Congressional awareness of patent troll abuses, evidenced by the slew of recently proposed legislative solutions at both the state and federal levels. However, it is critical that legislators in our state continue to work to address an urgent economic need: finding bipartisan solutions to stop the patent troll business model from stifling innovation, job growth, and competition.

Patent trolls leverage ownership of low-quality patents, along with shortcomings in outdated legislation, to generate significant financial gains by demanding unreasonable settlement or licensing fees, and threatening expensive and time-consuming patent infringement lawsuits.

Currently, businesses do not have a permanent, affordable, and efficient mechanism to challenge the validity of the patents in question, and as a result they suffer a significant loss of time and financial resources—even if no legitimate patent infringement has occurred.

Further, when a company prevails in defending itself against a patent troll’s frivolous lawsuit, it has no legal recourse against the attacker; it cannot even recoup the often substantial legal fees it was forced to incur just to defend itself. This shortcoming in existing patent legislation provides no deterrent to patent trolls, which offer none of the innovation or job creation offered by legitimate, operating companies.

Technology companies like TicketBiscuit are especially vulnerable targets for trolls, since many existing technology patents are not written specifically enough to differentiate between the intricate details of two similar technologies. As a result, falling victim to a frivolous patent infringement lawsuit is an expensive proposition, regardless of whether a settlement strategy or defense strategy is pursued.

This issue is widespread and clearly requires an urgent solution. Technology companies are not the only businesses to fall prey to patent trolls. Other more traditional types of businesses like restaurants, grocers, and bankers are also frequently caught in the crosshairs. The patent system must be reformed to stop patent troll abuse and to provide a permanent resource for businesses to challenge expensive and meritless legal distractions.

(Jeff Gale is chief executive officer of Birmingham-based TicketBiscuit, a national provider of web-based ticket sales management systems.)


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