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Companies Back U.S. Bills to Fight 'Patent Trolls'

With some patent holders suing companies that use RFID, end users are supporting efforts in Washington to revise the nation's patent laws.
By Mark Roberti
Aug 16, 2013

One sign that radio frequency identification technology is catching on is the growing number of lawsuits claiming patent infringement. As with Wi-Fi and other technologies, patent holders see the growing RFID market and hope to make money by suing end users that have deep pockets.

But end users of RFID and other technologies are fighting back. Dozens of major U.S. companies signed a letter addressed to lawmakers in Washington urging them to pass bills they said would protect new products against "extortive demands" from patent holders. Among those companies were Wal-Mart and Macy's; both are being sued by Round Rock Research, a firm that owns ultrahigh-frequency RFID patents originally filed by semiconductor company Micron Technology (see Update on the Round Rock Patent-Infringement Lawsuit and Patent Lawsuit Not a Major Issue for RFID).

Photo: iStockphoto
Many companies feel they are being unfairly targeted by "patent assertion entities" (PAEs), which purchase patents with the sole purpose of suing users of technology that might or might not infringe on their patents. These firms are called, derisively, "patent trolls."

In the letter to the leading Democrats and Republicans on the Senate and House of Representatives' Judiciary Committees, 44 companies urged the passage of bills that would reform the U.S. patent system. The letter says: "Members of both parties, the White House, legal scholars, economists, businesses, and public and private organizations increasingly recognize the need to address the growing problem of patent abuse. Wasteful and often frivolous litigation is burdening businesses and innovators across America. We need to ensure that our patent system promotes innovation and job creation, not abusive litigation. Real and lasting patent reform must deal with both symptoms—lengthy, expensive, and abusive lawsuits—and causes, including the flood of low-quality business method patents commonly behind the current epidemic of litigation."

The letter goes on to say that litigation brought by PAEs has exploded in size and scope, and now represents a majority of all patent litigation: "In 2011 alone, patent troll activity cost productive companies $29 billion in direct payouts, and even more in indirect costs."

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