Retailers call for end to “shakedown settlements” forced by patent trolls

The National Retail Federation today called on Congress to pass patent reform legislation that would put an end to “shakedown settlements” forced on retailers by patent trolls.

“Effective patent litigation reform legislation is about stopping the patent trolls’ lucrative business model of asserting meritless patents and getting shakedown settlements,” NRF Senior Vice President David French said. “Only Congress can pass reform needed to put them out of business for good.

“Retailers who once engaged with small technology providers no longer invest in their innovation out of fear of increased litigation brought by patent trolls,” French said. “Patent trolls have created a chilling effect on retailers’ incorporation of technology in their stores and online.”

French’s comments came in a statement submitted to the Senate Small Business Committee, which is holding a hearing today to examine the impact of the patent trolls on small businesses.

Patent trolls are companies that purchase often-obscure patents for technology they did not invent, then demand licensing fees from retailers and other business that sometimes do not realize the technology is even patented. Trolls usually lose in court, but court costs are so high that French said they often end up “effectively blackmailing a retailer into settlement.” “Removing or even loosening this grip on retailers will allow innovation and growth to flourish and undoubtedly benefit the overall U.S. economy,” French said.

Today’s hearing follows the recent release of a study by Unified Patents showing that a record number of patent disputes were filed in U.S. District Court and at the U.S. Patent and Trademark Office last year. Two-thirds of the court cases came from patent trolls. – See more at: