Patent abuse not only a homegrown problem
North Carolina lawmakers are working diligently to improve our state’s economy. Across the Tar Heel State, businesses are growing again, unemployment is down and innovation is flourishing, thanks in part to legislative efforts to address and reform patent abuses.
Last year I joined Rep. Tom Murry and other leaders to pass the Abusive Patent Assertions Act. The new law addresses the growing problem of patent trolling, where trolls or patent assertion entities – who don’t make or produce anything – sue unsuspecting businesses and entrepreneurs by making patent infringement claims to extort usage fees. Often those in the cross-hairs are small and start-up businesses with limited resources to put toward costly legal battles.
Each year patent trolling costs the economy an estimated $80 billion in litigation expenses and lost revenues and productivity. Research by Santa Clara University found defending against infringement claims costs between $875,000 and $1 million to settle in court, and as much as $340,000 outside of court. SAS, the Cary-based software company, fortunately prevailed in a recent patent trolling case in which the PAE that sued SAS was reported to have only several hundred dollars in assets despite accruing $85 million from honest businesses from similar lawsuits.
While we have made important strides in North Carolina to address patent abuse, new global threats are emerging. Countries including Taiwan, Japan and France are supporting government sponsored patent trolls (GSPTs), which operate in a similar manner as PAEs but with the power of government funding and resources behind them. GSPTs are real-world examples of protectionist trade policy at its worst.
Designed to provide an unfair competitive edge to locally based businesses and to threaten competitors with the resources of the state, GSPTs will make doing business for American companies more expensive, disrupt global trading markets and harm local manufacturing around the world. Curtailing GPSTs will require action on a national level through current and pending trade agreements working through organizations like the World Trade Organization and via agreements like the General Agreement on Tariffs & Trade, which require that imported products be treated no less favorably than goods manufactured domestically.
We structure our trade policy based on fair and competitive principles, and our allies should be held to the same standards. In the Tar Heel State, the so-called “Carolina Comeback” is being driven by competition, fair trade and innovation – principles that our global trading partners should embrace.
Rep. Jason Saine
The writer, a Republican, represents District 97. The length limit was waived.