Senator wants end to demand letters from “bottom feeder” patent trolls

An anti-patent-troll bill was introduced in Congress two weeks ago and debated at the House Judiciary Committee last week. Yesterday, a Senate committee convened to talk about one of the nastier sides of the patent wars: patent licensing companies that send out thousands of letters asking for payouts from small businesses, often for everyday business behavior like using scanners.

Sen. Claire McCaskill (D-MO) convened a meeting of the Senate Commerce Committee, bringing four key personalities in patent reform to Capitol Hill. Her goal was to find out if something could be done to stop the patent threat letters, from a consumer protection standpoint.

“The issue here is not about the right to assert one’s patent,” said McCaskill. “It’s not even really about the patent system. It’s about the deceptive and unfair practice of threatening consumers. It’s about scam artists preying on the vulnerable.”

This morning, Politico reports that a bill specifically addressing the issue of patent demand letters will be introduced by Rep. Jared Polis (D-CO) in the House. The idea is to introduce it before the big bill goes through “markup,” the process by which amendments are added.

Yesterday, the first to speak at McCaskill’s committee was Jim Bruning, the Nebraska Attorney General who has made it a personal mission to stop MPHJ Technology. That’s the patent troll first covered by Ars Technica, which has demanded $1,000 per worker for patents it says cover scanning to e-mail. Bruning described how MPHJ had done minimal to no research before making its infringement allegations. The “scanner trolls” even sent a letter to an Alzheimer’s patient in a nursing home, saying he was infringing through his work as a former Phelps County emergency manager. Another MPHJ target, according to Bruning, was Voices of Omaha, a community choir run on a shoestring budget.

“Use your subpoena powers,” Bruning urged McCaskill. “Have them explain why they sent a demand letter. Through these efforts we can stop patent trolling in America. We consider this similar to garden-variety extortion.”

Mark Chandler, general counsel at Cisco, explained how his company went to court to stop Innovatio from demanding thousands of dollars from coffee shops and chain motels, just for using basic router technology.

“They told [letter recipients] that thousands of companies had already paid Innovatio,” said Chandler, while leaving out the fact that those payments occurred under the auspices of the patents’ previous owner, Broadcom. “Did they tell them that manufacturers like Cisco were eager to defend them? No.”

“We need your help bringing sunlight to a dark corner of the patent system,” he concluded.

Cisco filed a RICO claim against Innovatio, but that failed. However, a recent ruling has limited Innovatio to asking for just pennies per Wi-Fi access point—a tiny fraction of the thousands they were trying to shake out of each business with threat letters.

“We spent $13 million fighting Innovatio,” he said. “But I’m proud of every cent.”

Julie Samuels of the Electronic Frontier Foundation, a longtime fighter for patent reform, spoke next. She emphasized transparency, saying that the Federal Trade Commission could keep a registry of patent threat letters that get sent. Essentially, the government could create something like the Trolling Effects threat-letter site that EFF recently set up; but with real legal teeth. “These trolls conduct the vast majority of their business under the veil of secrecy,” she said.