A patent infringement case that some retailers now face involves a patent issued in 2000 called "Data display software with actions and links integrated with information" owned by a Texas firm called Select Retrieval. It describes a way of structuring information that applies to a seemingly common practice. (See patent). Whether this patent is too broad or not doesn't matter. It's an approved patent, and the moment a demand letter arrives, a business is sent down a rabbit hole of legal costs and the financial calculus of settlement.
A patent is essentially a monopoly, and "if the patents are overly broad, then what happens is it prevents follow-on innovation," said Bernard Knight, a former general counsel at the USPTO who is now a partner at McDermott Will & Emery LLP. "Other parties don't know how to design around those claims to create a new software invention."
L.L. Bean is now fighting the data display patent. The case began with a five-page complaint and no explanation of how the retailers website infringes the patent. That's left to L.L. Bean to figure out.
There's ample sympathy for companies in L.L. Bean's position. Retailers often assemble their websites with module purchases, outside services and internal IT development. Even when sites are not core to the business, infringement cases can become a big financial drag.
J.C. Penny has been sued for infringement for allowing customers to activate a gift card at the point of sale, browsing a website on a mobile phone or enabling a customer to put purchases in an electronic shopping bag or cart. It also has faced multiple claims for providing information about store locations to a mobile phone, among other processes. All of these lawsuit arrived in the last four years, Janet Dhillon, the store's general counsel, said during a House hearing earlier this year.
The trolls have accomplished one thing. "You have lots of different companies and industries that are now behind the idea that they really need some patent reform," said Brann.
The Innovation Act creates risk for anyone who brings an infringement lawsuit, because they could end up paying the defendant's legal costs if a court determines the case wasn't justified. "Small businesses can take some comfort in knowing that if their positions are 'reasonably justified,' they should not be penalized," said Robert King, a partner at Hunton & Williams.
Patent assertion entities "are going to have to look long and hard at their cases before they just start sending out threat letters or filing complaints," he said.
But until the courts start making rulings it won't be clear just what a reasonably justified position is, he said.
The proposed law also requires that infringement lawsuits detail -- upfront -- the nature of the claim and specifics about what products and processes are infringing. That information usually comes out during discovery, but defendants may have already settled before legal bills get too steep.
Geoff Cohen, computer scientist at Elysium Digital, a litigation consulting company, said requiring someone to do more work before bringing a case shouldn't be a problem. "If you have a good hand you really don't care whether you have to put $10 down or $1 down because you're going to win and it doesn't bother you," said Cohen.
But patent reform will mean a series of trade-offs, warned Darren Donnelly, an attorney at Fenwick & West, who said that raising the bar too high on what's required to bring a suit could make it more difficult for a start-up to make a complaint against a large competitor.
The struggle for Congress and the courts is finding a way beforehand to determine what a meritorious or non-meritorious claim is, "and there is just no good way of doing that," said Donnelly.
Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed . His e-mail address is pthibodeau@computerworld.com.
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