Apr 9, 2013

APRIL 9, 2013 - ARLINGTON, VA - Food Marketing Institute (FMI) issued public comments to the Federal Trade Commission and the Department of Justice Antitrust Division in support of new rules related to intellectual property litigation, specifically, the patent assertion entities (PAEs) that are harming retail markets and ultimately consumers.
 
Recently, FMI members have been sued, threatened with litigation, and sent demand letters by patent trolls for employing widely adopted technology such as store locater functions, text messages and clickable menus on their websites. Also known as ‘non-practicing entities,’ patent trolls are firms that acquire old—often invalid—patents with no intention of further developing, manufacturing or marketing the patents. They buy the patents only for the purposes of enforcing them.   

FMI Regulatory Counsel Erik Lieberman explained, “Patent trolls are a significant and growing threat to America’s businesses. A troubling trend is that these trolls are now targeting end users of widely adopted technology, including retailers and small businesses.  Patent trolls inhibit innovation and impose tens of billions of dollars of unnecessary costs on the economy every year.  It is time for the Administration to take action to stop the activities of trolls.”    
 
The joint comments assert “The impact on innovation and small business is critical. Suppliers of new services who are threatened by these types of dubious litigation cannot shed the shadow of doubt cast upon their enterprise. This stifles the growth of enterprises that are trying to gain a foothold in the industry, and pushes the conservative (or fearful) retailer to only do business with those vendors who can display immunity because they have settled with the PAEs, often at a high cost. And in the worst case, retailers may completely abandon the adoption of new technology because of the threat of PAE litigation. All of this results in the stifling of profitability, ingenuity, and growth, three things that we desperately need in an economy that is straining to grow.
 
“The impact on innovation and small business is critical. Suppliers of new services who are threatened by these types of dubious litigation cannot shed the shadow of doubt cast upon their enterprise. This stifles the growth of enterprises that are trying to gain a foothold in the industry, and pushes the conservative (or fearful) retailer to only do business with those vendors who can display immunity because they have settled with the PAEs, often at a high cost. And in the worst case, retailers may completely abandon the adoption of new technology because of the threat of PAE litigation. All of this results in the stifling of profitability, ingenuity, and growth, three things that we desperately need in an economy that is straining to grow.”
 
FMI is encouraged by the focus both agencies are placing on this critical issue, and similarly, pleased with and supportive of the efforts of Rep. DeFazio, Rep. Chaffetz and other members of Congress to constrain the unsustainable trend in patent litigation through enactment of the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act (H.R. 845).