Retailers urge action to combat patent troll demand letters

Published on: Nov 7, 2013
Retailers, advertisers and marketers called on Congress today to involve the Federal Trade Commission in efforts to eliminate frivolous patent lawsuits, saying vague letters sent out by “patent trolls” demanding licensing fees amount to unfair and deceptive practices.

“Patent trolls should not have free rein to assert expired patents, make repeated and false threats of litigation to extort fees, and materially mislead the recipients of these demands,” BrandsMart USA Executive Vice President Larry Sinewitz said. “At the very least, patent trolls should be required to provide more details in their letters.”

Sinewitz, whose electronics and appliances retailer operates 11 stores in Florida and Georgia and maintains an e-commerce operation, testified [PDF] today on behalf of the National Retail Federation and the Stop Patent Abuse Now (SPAN) Coalition during a Senate Commerce Committee hearing on patent abuse. The hearing focused on “demand letters” sent by patent trolls, which critics say attempt to extort large amounts of money while providing little information about the patent involved or the alleged infringement.

Sinewitz said his company has received six demand letters in the past several years, citing a two-paragraph document [PDF] received in 2008 as an example of “a vague letter accusing me of patent infringement and trying to get me to pay them some unknown sum of money.” Just initially consulting a patent attorney to determine what claims are being made can cost a company tens of thousands of dollars. Over the past 10 years BrandsMart has spent $500,000 on legal fees and settlements with patent trolls, he said.

Sinewitz called on lawmakers to include a provision in pending patent reform legislation that would require the FTC to investigate demand letters and use its existing authority to regulate unfair and deceptive trade practices to “rein in bad actors that target Main Street businesses.”

“Requiring greater and truthful disclosure will provide greater certainty to businesses, saving them time and money as they investigate the person or entity asserting the patent and determine the overall merits of the infringement claim,” he said.

Sinewitz said claims seen from patent trolls involve not just e-commerce applications but everyday business operations and practices of brick-and-mortar stores, such as scanning barcodes, printing receipts, the sale of gift cards and the connection of equipment such as computers and printers to an Ethernet network.

As the world’s largest retail trade association and the voice of retail worldwide, NRF represents retailers of all types and sizes, including chain restaurants and industry partners, from the United States and more than 45 countries abroad. Retailers operate more than 3.6 million U.S. establishments that support one in four U.S. jobs – 42 million working Americans. Contributing $2.5 trillion to annual GDP, retail is a daily barometer for the nation’s economy. NRF’s This is Retail campaign highlights the industry’s opportunities for life-long careers, how retailers strengthen communities at home and abroad, and the critical role that retail plays in driving innovation. www.nrf.com