Exhibit A of why patent reform is needed: White Castle.
The family-run, slider-slinging burger joint has apparently been targeted by not one, not two, but three different patent trolls in recent years. And no, the patents have nothing to do with steamed buns or circular-shaped chicken rings. (How do they do it?)
White Castle received demand letters regarding their digital menu boards, the use of QR barcodes on their packaging, and about putting a hyperlink in an email, reports Legal Newsline. Patent claims over menus, barcodes, and hyperlinks -- this is why we need patent reform.
The Effects of a Patent Troll
Jamie Richardson, the vice president of corporate relations at White Castle, told Legal Newsline that the trolls have "made us really gun-shy."
How so? Now, when consulting with advertising firms, rather than focus on the creative merits of the marketing, they ask about indemnity. Vague demand letters make it impossible to understand what, exactly, the trolls are targeting, which necessitates the use of costly outside counsel.
If something as simple as including a hyperlink in an email is enough to draw trolls' attention, you can imagine the effect this would have on any innovative advertising.
The Innovation Act
Richardson noted that, while the company has a "deep reverence" for intellectual property rights, the company also supports the Innovation Act, which we've covered here repeatedly, and which passed the House in December.
How would the Innovation Act presumably help White Castle?
Fee-shifting would be huge. Should any trolls bring suit and lose, they'd be stuck with the tab. And if they can't pay, any other interested parties (such as the true patent owner or parent companies), which must be disclosed per the Innovation Act, could be liable as well.
Vague demand letters would still be irksome (the bill's sponsor Rep. Bob Goodlatte (R-Va) noted previously that free speech considerations limit the ability to clamp down on demand letters), but should the troll proceed to litigation, they'd have to explain, clearly, how exactly the defendant company, such as White Castle, is infringing their patent.
As for indemnity, the bill allows manufacturers to step in and litigate patent claims while any pending suits against customers are stayed. Hypothetically, that would mean White Castle could sit out any litigation over their electronic message boards, though they would be bound by the outcome of the Manufacturer v. Troll litigation.
It's not a perfect solution, but it beats the alternative: hiring outside counsel, litigating against frivolous claims, and paying the tab once the suit is dismissed.
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- Is the FTC Prepping for a War on Patent Trolls? (FindLaw's In House Blog)
- Innovation Act: Bad for Small Businesses with IP? (FindLaw's In House Blog)
- Corporate Counsel Center (FindLaw)