Patent trolls are still coming after restaurants, and yours could be next

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.

Tell Congress to support legislation to stop patent trolls.

Sweeney: No stronger 'ladders of opportunity' than restaurants

Economic opportunity, along with immigration and patent reform—issues that figure prominently into the day-to-day operations of restaurants across the country—had a visible role in President Obama’s State of the Union address.

NRA President/CEO
Dawn Sweeney

Obama said he’d push policies to “speed up growth, strengthen the middle class, and build new ladders of opportunity.”

“There are no stronger ‘ladders of opportunity’ in today’s economy than in the restaurant industry,” said Dawn Sweeney, National Restaurant Association President/CEO. “Our essential industry continues to be an industry of opportunity. Restaurants are critical employers that literally train America’s workforce.”

Obama noted the economic benefits of immigration reform and called on Congress to pass reforms this year. The National Restaurant Association, a strong supporter of comprehensive immigration reform, is leading efforts to build support for measures that offer a clear path to legalization for the nation’s 11 million undocumented workers, national use of the E-Verify employment-eligibility verification system, and improved border security that doesn’t interfere with legal travel and tourism.

Tell Congress to pass comprehensive immigration reform.

Obama again voiced his support for a nearly 40 percent increase in the $7.25 federal minimum wage, promising to issue an executive order in coming weeks to raise the minimum wage for federal contractors to $10.10 per hour. The president also supports legislation to raise the minimum wage to that amount for all employees, and challenged states and cities to raise their wages if Congress doesn’t act. The National Restaurant Association opposes mandatory wage increases and believes dramatic wage hikes limit opportunities, particularly for teens, entry-level and lower-skilled workers, who tend to have the highest unemployment rates. 

Tell your senators why a mandatory wage increase hurts opportunity.

“Providing individuals with a path to upward mobility is a critical national issue with long-term economic implications,” Sweeney said. “However, dramatic increases in the minimum wage are not the silver bullet that national labor unions and others are portraying them to be. Strong majorities of Americans believe that education and job training are much more effective strategies to provide real opportunity to upward mobility.”

The president also touched on patent abuse, an issue that has landed many restaurants on the receiving end of frivolous lawsuits by so-called “patent trolls” in recent years. Obama, who last year signed a series of executive orders aimed at curbing patent abuse, asked Congress to “pass a patent reform bill that allows our businesses to stay focused on innovation, not costly, needless litigation.”