Startup and Innovator Advocates Urge Rapid Patent Reform Action

“Courts And PTO Are Helping Fight Trolls But Congress Must Finish the Job,” say Engine Advocacy and App Developers Alliance

Washington, D.C. - The Application Developers Alliance and Engine Advocacy, on behalf of startups and innovators nationwide, today urged the House Judiciary Committee’s Subcommittee on Intellectual Property to disarm abusive patent trolls by swiftly enacting comprehensive patent reform legislation, and not to be distracted by recent court decisions that help only the largest companies.

“Patent trolls exploit low-quality patents to extort companies, often forcing them to pay settlements because that is cheaper than paying for a meritorious defense. Small companies and startups are particularly vulnerable to patent troll abuses. 

“In his testimony for tomorrow’s hearing, the National Venture Capital Association witness states that recent court decisions have eliminated the need for comprehensive legislative reform. That is simply false. In 2014 the U.S. Supreme Court did issue important and helpful patent law decisions, but none of the decisions impact the hundreds of thousands of never-should-have-been-issued junk patents that can still be used by a patent troll for the better part of the next two decades. Moreover, the Court’s decisions effectively help only patent troll victims that can afford to pay for a full and lengthy legal defense.

“Just in the last few weeks we have learned of one troll suing crowd-funding platforms for infringing patents that claim ownership of simple technology connecting companies with funders, and another troll suing several small photographers and online photo services. The PTO under today’s post-Alice rules would likely have rejected both of these patents – and that is an improvement based on a recent Supreme Court decision that we all applaud. Nevertheless, both patents are and will remain legal and effective – and powerful extortion weapons against small companies – until a federal court or the Patent Trial and Appeals Board formally invalidates them. These processes are expensive and distracting and are not what America’s startup resources should be used for. 

“Finally, it is notable that today’s testimony flies in the face of a recent survey of more than 200 venture capitalists and their portfolio companies.  That study, conducted through the NVCA and of its membership, documented that 70 percent of VCs report that they’ve had a portfolio company receive a patent demand, and that well over half of these came from non-practicing entities. A vast majority of VCs and startup CEOs also reported that the demands had a significant impact on the company.  Moreover, 100 percent of the survey respondents said that existing patent demands can be a major deterrent to potential investments, with about half saying it “would be” a major deterrent.

“The evidence is clear – patent trolls are continuing to abuse small and large companies and waste judicial resources.  We urge Congress to follow the Supreme Court’s lead and quickly enact comprehensive legislation that undermines the patent troll business model.” 

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The Application Developers Alliance is a non-profit global membership organization that supports developers as creators, innovators, and entrepreneurs. We promote industry growth and advocate on public policy and industry issues. The Apps Alliance, which now includes more than 200 corporate members and 36,000 individual members, launched in January 2012 and initiated European services in early 2014.  Membership includes app publishers, developer agencies, platforms, wireless carriers, hardware manufacturers, ad networks, enterprise tools and service providers.

 

Engine Advocacy represents a network of more than 500 startups. It supports the growth of technology entrepreneurship through economic research, policy analysis, and advocacy on local and national issues.