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National Restaurant Association - White House calls for action on patent trolls

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White House calls for action on patent trolls

The Obama Administration on Wednesday issued several executive actions and made a series of recommendations to take action against patent assertion entities (PAEs)—commonly known as “patent trolls”—a practice that involves claiming ownership of a business practice, tools or technology and profiting through the threat of litigation.

Restaurant companies have found themselves on the receiving end of threats from PAEs for such “patent violations” as their use of Web applications, online nutrition calculators and online ordering tools.

The number of lawsuits brought by PAEs has tripled in the past two years, according to a report released Wednesday by the National Economic Council and Council of Economic Advisors. PAEs now account for 62 percent of all patent infringement cases, and it’s estimated that more than 100,000 companies have been threatened with litigation by PAEs over the past year, the report said. 

PAEs often cite the potential high cost of litigation in an effort to elicit settlements from businesses. The practice is widespread across a number of industries including retail, telecom and finance. National Restaurant Association staff on Wednesday met with representatives of those and other industries for a discussion on patent reform organized by the National Retail Federation.

The executive actions announced Wednesday include steps that will allow those facing litigation to learn the extent of a PAE’s claim to ownership of a patent, prevent overly broad claims to ownership, and expand efforts to inform restaurant owners and others who might be targeted of their rights and common tactics used by PAEs. The Administration’s legislative recommendations include measures aimed at greater disclosure of patent ownership information, protections for businesses using off-the-shelf tools and technology, and greater transparency to reduce abusive litigation.

“We are pleased to see recognition from the Administration that these patent trolls don’t actually produce anything themselves; yet, they create a real strain on Main Street businesses, making it critical that we find a solution that protects downstream users of patented technologies,” said Scott DeFife, NRA executive vice president, policy and government affairs. “Patent trolls are a fast-growing concern for the restaurant and food service industry. Restaurateurs have become increasingly aware of and concerned with the frivolous demands and litigation brought by patent trolls that harm innovation in the industry, and ultimately our customers.”

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