FMI Urges Regulatory Action Against Patent Trolls

Food Marketing Institute (FMI) has issued public comments to the Federal Trade Commission and the Department of Justice Antitrust Division in support of new rules related to intellectual property litigation, specifically, the patent assertion entities (PAEs) that are harming retail markets and ultimately consumers.

Recently, FMI members have been sued, threatened with litigation and sent demand letters by patent trolls for employing widely adopted technology such as store locater functions, text messages and clickable menus on their websites. Also known as “non-practicing entities,” patent trolls are firms that acquire old -- often invalid -- patents with no intention of further developing, manufacturing or marketing the patents, but instead only to enforce them.

“Patent trolls are a significant and growing threat to America’s businesses,” said Erik Lieberman, FMI Regulatory Counsel. “A troubling trend is that these trolls are now targeting end users of widely adopted technology, including retailers and small businesses. Patent trolls inhibit innovation and impose tens of billions of dollars of unnecessary costs on the economy every year. It is time for the Administration to take action to stop the activities of trolls.”

The joint comments assert that the “Suppliers of new services who are threatened by these types of dubious litigation cannot shed the shadow of doubt cast upon their enterprise. This stifles the growth of enterprises that are trying to gain a foothold in the industry, and pushes the conservative (or fearful) retailer to only do business with those vendors who can display immunity because they have settled with the PAEs, often at a high cost. And in the worst case, retailers may completely abandon the adoption of new technology because of the threat of PAE litigation. All of this results in the stifling of profitability, ingenuity, and growth, three things that we desperately need in an economy that is straining to grow.”

FMI said it is encouraged by the focus both agencies are placing on the issue, and similarly, supportive of the efforts of Rep. DeFazio, Rep. Chaffetz and other members of Congress to constrain the unsustainable trend in patent litigation through enactment of the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act (H.R. 845).

The Food Marketing Institute conducts programs in public affairs, food safety, research, education and industry relations on behalf of its nearly 1,250 food retail and wholesale member companies in the U.S. and abroad.