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DeRoche: Patent Trolls Targeting RI Retailers & Main Street Businesses

Saturday, March 15, 2014


Trolls seem like a topic safely consigned to a fairytale, but for Rhode Island’s retailers, restaurants, and other businesses, they’re a serious and growing problem. These new trolls – called patent trolls – are costing jobs, hurting consumers, and are taking an $80 billion bite out of the economy each year.

Patent trolls are nameless, faceless entities that don’t actually make anything, but instead threaten businesses by alleging infringement of vague or poorly-worded patents. Several of the most common practices used by retailers here in Rhode Island have been targeted by patent trolls, such as placing store locators on their websites or using barcodes. Just about every retailer in the country uses these technologies, but that hasn’t stopped patent trolls from demanding millions from them for the privilege. Other common practices targeted by trolls include offering online menus, providing Wi-Fi to customers, or even scanning documents and then emailing them.

Here in Rhode Island we know that several of our supermarkets, pharmacies, and restaurant chains have all been targeted by these abusive patent trolls.

Retailers and restaurants are key contributors to the Rhode Island economy: combined, the two industries support more than 100,000 jobs and billions of dollars in economic impact. But instead of adding jobs and growing the economy, our main street businesses have to spend their time responding to anonymous P.O. boxes demanding huge amounts of money for the most common business practices. Make no mistake, responding to patent trolls is costly: for a small- or medium-sized business, it can cost over $1 million just to concede to a troll and pay the license fee, let alone to fight the troll in court. This is money that could be better spent elsewhere.

Congress needs to act now to fight patent trolls and stop this drain on so many main street businesses. The Rhode Island Retail Federation, the organization I lead, has joined with organizations representing restaurants, hotels, banks, credit unions and other companies across the state to form the Rhode Island Main Street Patent Coalition, part of a larger national effort advocating for patent reform.

Bipartisan patent troll reform legislation has already passed the House of Representatives, and similar legislation is now being considered by the Senate. Our elected officials recognize that this problem must be solved: recently, forty-two state attorneys general, including Rhode Island’s Peter Kilmartin, called on Congress to pass patent troll reform, and President Obama specifically mentioned the issue in his State of the Union speech in January. Any successful final legislation will incorporate five key reforms: improving patent quality; eliminating trolls’ ability to hide behind multiple shell corporations; making it easier to punish trolls that send fraudulent and abusive shakedown demand letters; requiring that trolls sue the party responsible for alleged infringement, not end users who had no input in the product development; and making trolls pay when they sue companies frivolously.

The problem of patent trolls is not one that’s going away, and the longer the problem goes unaddressed, the more Rhode Island businesses and our economy will suffer. Congress needs to stand up for Rhode Island’s retailers and other main street businesses by passing legislation to stop patent trolls in their tracks.

Paul DeRoche is the Executive Director of the Rhode Island Retail Federation. 


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