Commentary: Retailers need to join forces to solve patent troll problem

Diane K. Lettelleir, senior managing counsel of JCPenney Corp., discusses why retailers can’t wait for the government to solve the patent troll problem in the commentary below:



JCPenney and numerous other retailers have been hunted for the last decade by patent trolls that aggressively file suits based on overly broad claims in patents against related but distinct technologies. JCPenney alone has endured dozens of patent troll lawsuits over this period.



Defending against these lawsuits requires the expenditure of excessive amounts of money as well as the investment of significant human capital. Every dollar JCPenney spends fighting these claims are dollars we cannot invest in improvements to products and services or job creation. Every hour of engineer and developer time spent in endless discovery are hours stolen from the development of the new technology required to sustain and grow JCPenney’s core businesses. This vicious cycle is playing out in thousands of patent troll lawsuits against countless other companies year after year.



Far Reaching Impact

In addition to incurring the costs of defending itself against patent infringement claims against JCPenney, companies that supply technology to JCPenney pass on their costs of defending against patent troll lawsuits in the form of higher prices for their technology and services. The costs of these lawsuits ultimately impact prices that consumers pay for products sold by retailers and the return on investment for shareholders. In turn, the additional cost burden makes it increasingly difficult for retailers to compete.



As difficult as it is to manage the financial drain caused by patent infringement litigation, perhaps more troubling is the barrier to adoption of new technology that this litigation creates. Innovation cannot thrive in a vacuum. In order for innovation to thrive and innovators to monetize their innovations, potential customers must be in a position to adopt those innovations. The continuing threat of unchecked patent troll litigation erects an artificial barrier to the adoption of new technologies because the excessive cost of defending against potential litigation adds a layer of cost consideration.



Legislative Solutions

While seeking judicial relief in individual cases is an important short term component of the solution to patent litigation abuse, JCPenney recognizes that it cannot litigate its way clear of the patent troll litigation phenomena. Similarly, while pursuing legislative reform is an important step towards curbing future litigation abuses, legislative reform, if it occurs at all, will not provide a complete solution.



The current political climate does not lend itself to swift Congressional action on current legislative proposals. Unfortunately, there is also the very real possibility that some of the improvements that followed enactment of the American Invents Act in 2011 may be unwound by the new administration. Given this reality, JCPenney has sought out other means of insulating itself from the continuing threat of patent troll litigation.



Business-Led Solutions

The good news is that there are a number of organizations pioneering market-driven solutions, such as Unified Patents, Allied Signal Trust, and LOT Network, each tackling a slightly different point of the patent troll litigation lifecycle. A critical component of JCPenney’s long term defensive strategy is the licensing opportunities gained by our membership in LOT Network, a proactive strategy to defend against unwanted litigation.



LOT Network is non-profit community of companies that agree that if one of their patents falls into the hands of a patent troll, all other LOT members have their conditional license to that patent activated, granting them immunity from patent troll litigation. Members can still use their patents for traditional purposes, like suing other companies or even one another.



Increasingly, other members of the retail community, such as Amazon, Macy’s and Bed, Bath and Beyond, as well as major players across industries, like Google, Slack, Dropbox and Intuit, are banding together in communities such as these to leverage the cost efficiencies gained by joining forces.



Businesses simply can’t wait for the government to solve the patent troll problem. Nor can we as retailers afford to be funneling significant funds away from our core businesses. Standing together gives us advantages – sharing strategies, pooling resources, expanding networks – that aren’t available to us if we face the problem alone. We are stronger together.