Patent Trolls Abusing The Courts Pose Major Economic Threat

troll3How well do you remember the fairy tales you were taught as a child? More importantly, do you recall any of them having a hidden lesson about tort reform?

If you heard this week’s edition of “Let’s Be Fair!,” you know that the story of Billy Goats Gruff does indeed have a hidden lesson that can be used to understand a diabolical new kind of character known as a patent troll.

In the story about the billy goats, a troll who hides under a bridge threatens to gobble up anyone who tries to cross over it. In modern-day America, so-called patent trolls are abusing the legal system to gobble up the hard-earned money of entrepreneurs who, the troll argues, are a infringing on their patent. This is no fairy tale, though, and victims of the trolls include both large and small businesses, so almost no one is safe from the lawsuits.

What exactly is a patent troll? An excellent article in Forbes describes them this way:

“a ‘patent troll’ is, by definition, any person or entity that owns a patent but does not produce the patented product or practice the patented method. Instead, the so-called ‘troll’ exacts a toll, in the form of a license fee, from other persons or entities the “troll” believes infringes (or do infringe) the patent.”

So, what’s the problem? If someone owns the rights to a product or process, why shouldn’t they be entitled to payment? It’s the American way, right?

Well, if someone has a legitimate patent and another party is genuinely infringing on it, then yes, the patent owner would have the right to demand payment. However, the problem today is that many of the lawsuits being filed by patent trolls allege infringements of their patent that are so vague that they amount to nothing more than fishing expeditions, and their victims have to either settle out of court to cut their losses or spend tens of thousands of dollars fighting them.

These trolls are exploiting current law which does not require that a patent holder explain how a patent is infringed, or even identify the product involved. This makes it nearly impossible for someone who has been sued to evaluate the case and decide how to proceed.

Victims of patent trolls have included everyone from a famous comedian and a popular website to small home builders and large consumer product makers. Click here to see a short video of a home builder in Oregon explaining how he was targeted by patent troll and how homebuyers across the nation would have to pay more for their slice of the American dream if the lawsuit were successful.

A few years ago, I appeared on John Stossel’s program on FOX with the creator of a popular website who was also sued by a patent troll. His name is Drew Curtis, and despite huge odds, he fought back. He eventually won, and later, he gave an excellent TED talk on his experience that I highly recommend. You can see it here.

Certainly, patents are important to our economy for many reasons, not the least of which is that they give incentives to inventors to be creative. However, in the hands of unethical trolls, they’ve become nothing more than assault weapons for hold-up artists.

A diverse and well-organized coalition of job providers called United for Patent Reform has mounted a national campaign to end this form of legalized extortion. Find out about their effort here.

New Report Sheds Light On $45M Effort To Abolish Judicial Elections

An editorial writer for the Detroit News posed an excellent question about judges this week and then gave us something to chew on: “Think you should have the right to vote for judges?  A lot of people think you shouldn’t.  And they are willing to spend a lot of money to take that right away from you.”

Jeffrey Hadden has been watching the politics of judicial appointments for 40 years, and in his most recent column, he discusses a new report released by the American Justice Partnership.  His column — and the new report — are worth your attention.

According to “Justice Hijacked: The $45 Million Campaign (And Counting) to Abolish Judicial Elections and Reshape America’s Courts,” billionaire George Soros’ Open Society Institute has contributed at least that amount of money over the past ten years to fund a campaign that encourages the appointment of judges over the democratic process of electing them.

Judicial elections vs. judicial appointments is a hot topic in the legal community, and there is disagreement about which process is best…even among those who are leading the charge for tort reform and ending lawsuit abuse.  Hadden is a conservative writer but says he used to favor a system where judges are appointed and then run in an election to retain their seat.  However, he says he’s changed his mind.   Ultimately, his belief, and one shared by many legal reformers, is that the advantages of having judges answer to the public outweigh the disadvantages.

What do you think? A lot of people talk about frivolous lawsuits, and virtually all of us laugh at the outrageous ones, but there comes a time when someone has to do something about it, and more often than not, that “someone” is a judge.

If that judge constantly rules in favor of personal injury lawyers, ignores laws aimed at eliminating lawsuit abuse, and piles costs on consumers with his or her rulings, shouldn’t the people have an opportunity to vote that judge out of office?  Sure, elections can get expensive, but lawsuit abuse is expensive, too.  And in an appointment system, the opportunity for the average citizen to register his or her opinion with a vote on that judge doesn’t exist.

You can follow the ongoing debate over this issue at American Courthouse.

New Report Reveals Massive Influence Of Trial Lawyers In Washington D.C. Just As Their Lobbyists Warn President Obama Not To Support Tort Reform

An important new report recently released by the Manhattan Institute shines a bright spotlight on the tidal wave of campaign contributions flowing from personal injury lawyers to members of Congress. Get your free copy of the report here.

According to the Manhattan Institute, the amount of money being poured into the leadership of the U.S. Senate by personal injury lawyers now dwarfs contributions by all other industries. As evidence, the Manhattan Institute reveals that four of the top seven political donors to Majority Leader Harry Reid are plaintiff law firms.

It wouldn’t take a cynic to come to the conclusion that this financial relationship does not bode well for those who support efforts in Congress aimed at eliminating lawsuit abuse. But now, the story is getting even more interesting, and the stakes are as high as ever.

Yesterday, a headline in The Hill, a daily newspaper that covers Congress, declared: Trial Lawyers to Obama: Don’t deal on tort reform in healthcare negotiations. See full article here. Although the President has suggested in the past that there might be some kind of reform he’d support to eliminate meritless lawsuits against doctors, reformers have been waiting for him to support anything they consider meaningful.

The Manhattan Institute study and yesterday’s article in The Hill focus on trial lawyer influence in the nation’s capitol, but the decisions being made in Washington D.C. also have a huge impact on what is likely to happen in the states when it comes to medical liability reform.

When the Senate finally mustered enough votes to approve a heath care reform bill last December, the “tort reform” section in the bill that created demonstration projects in the states was considered a “gift” to trial lawyers. It didn’t do anything to encourage states to enact proposals to eliminate lawsuit abuse. Manhattan Institute Senior Fellow, Walter Olson, said all it did was “provide cover to lawmakers who feel they need to tell voters they did something on the tort reform front while guaranteeing that it won’t amount to anything that would bother the trial bar.”

Will President Obama’s recent statements finally move reform efforts forward? If so, he’ll need to convince Congress to encourage the states to approve reforms that actually bother the trial bar.