Battling 'patent trolls'

Staff Writer
Columbus CEO

MALTA, N.Y. — If you've never heard of a "patent troll," you might soon enough, although they don't live under bridges.

The term "patent troll" — which some would argue is derogatory — refers to shell companies that are set up with the sole purpose of bringing frivolous patent infringement lawsuits against businesses. Last year, two local businesses, Stewart's Shops and TrustCo Bank, were among the many businesses across the country sued by a Delaware company called Automated Transaction LLC that held various patents for ATMs.

The lawsuits against Stewart's and TrustCo, filed in U.S. District Court in Albany, alleged that by offering ATM services to their customers, both Stewart's and TrustCo were profiting from the patents that the company held, and should pay up.

Stewart's and TrustCo, which both countersued, were able to get the suits dismissed this year. But legislation now making its way through Congress could make patent litigation — and the life of a patent troll — a lot harder.

The House of Representatives earlier this month passed an anti-patent troll bill called the Innovation Act, while on Tuesday, the Senate Judiciary Committee is holding a hearing on patent litigation abuse. U.S. Sen. Chuck Schumer has supported patent troll legislation in the Senate as well.

''We think this legislation is long overdue," said Stewart's spokeswoman Maria D'Amelia. "It's unfortunate that the patent system has been abused and that this has become a hindrance to business growth. These lawsuits have become an unfortunate waste of time and money."

On Monday, a group of trade associations, including the New York State Broadcasters Association and the New York Newspaper Publishers Association, urged Congress to pass a patent troll law. They cited Boston University researchers who found that patent troll litigation costs the U.S. economy $80 billion a year. The group also noted that patent trolls don't start with lawsuits, but typically first threaten businesses with litigation and offer to settle out of court first.

Diane Kennedy, president of the state newspaper publishers association, said small businesses especially feel pressured to settle, knowing it will cost less than their legal expenses. But Kennedy says what patent troll firms are doing is just extortion. "That's the whole business model," she said.

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