If your restaurant hasn’t been on the receiving end of a legal shakedown from a patent troll, your time may be running out.
Over the past few years, patent trolls—companies that purchase vague patents and threaten to sue restaurants and other businesses that don’t pay licensing fees for their use of common technologies—have cost the economy more than $20 billion a year. The number of lawsuits is on the rise. Patent Freedom, which collects data on patent troll activity, reports that 3,716 companies faced lawsuits from patent trolls in 2013, up from 3,352 the year before.
And patent trolls aren’t just going after big companies. A 2012 study by Boston University researchers found that most defendants in suits brought by patent trolls were small or medium-sized companies—those that can least afford the often seven-figure costs of defending against patent infringement lawsuits.
Patent trolls have come after restaurants for common service-enhancing features like online ordering, in-store WiFi, and digital menu boards.
Seeking relief for restaurants
The National Restaurant Association (NRA) recently joined United for Patent Reform, a coalition of businesses and trade groups representing technology, retail, communications, construction and other sectors, to ask Congress to make changes to help end frivolous patent-infringement lawsuits.
Among other reforms, the coalition is seeking an end to vague demand letters designed to extract early settlements; clear, specific explanations from patent trolls regarding their interest in the patent; protections for the end users of products and technology; and requirements for patent trolls to pay plaintiffs’ legal costs when their infringement lawsuits are unsuccessful.
Help could be on the way in the form of the Innovation Act, recently introduced in the House by Rep. Bob Goodlatte (R-Va.). The bill aims to curb frivolous infringement lawsuits by requiring plaintiffs to disclose the owner of the patent and why they’re suing the defendant, as well as allow some of the costs of defense to be shifted to the plaintiff if the lawsuit is unsuccessful. The bill passed the House with bipartisan support in 2013 before stalling in the Senate.