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Patently unfair

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Last month Upfront defended the Marketplace Fairness Act.

Some of you sent kind notes indicating appreciation for remarks in support of a level tax-playing field for online and brick-and-mortar retailers. In doing so, you revealed your fair-minded nature.

Not everyone agreed with every bullet point, however.

"I feel your Upfront piece in the May 2013 issue dismissed the complex issue with a toss-off answer," wrote one reader.

Upfront welcomes opposing viewpoints, and the reader above offers a legitimate and valid criticism. (Check out the full item at Homechannelnews.com.)

But let's see if anyone disagrees with round two of Upfront's crusade for common sense when we attack the patently unfair rules governing arcane, frivolous, disruptive and expensive patent lawsuits.

By anyone, we mean to exclude patent trolls. (More on them in a moment.)

One of my favorite examples of patent exuberance at retail involves a patent for lenticular optical display used in conjunction with stored value cards (gift cards). I have no beef with lenticular optical display — an amazing invention that allows for all kinds of sight gags. When looked at from one angle, the image is of a kitty cat. From another angle, the magic of L.O.D. converts the scene to a lunging tiger.

The inventor of such a technology deserves protection for and profits from his innovation. But a specific patent for L.O.D. on gift cards? Your honor, that's just an excuse to try to sue somebody.

There are thousands of patents governing thousands of "inventions" even more arcane — buried deep in the products on the retailer's shelves, maybe their packaging, or embedded in the technology at the checkout and store website.

This is the age of patent trolls. These are firms that make a living by acquiring obscure patents and threatening to sue legitimate companies — often retailers — who didn't know there was such a thing as a patent for including a mobile link to a privacy policy posted on a website (an actual example).

Here's how the National Retail Federation explains it: "Of cases that make it to trial, patent trolls lose 92% of the time. But the cost of defending a company against the claims is so high — the average case costs $2 million and can take 18 months — that many victims settle out of court."

By the NRF's estimate, the activity cost legitimate businesses about $30 billion a year.

The tide appears to be turning. Earlier this month, the White House announced five executive actions and seven legislative recommendations to stem the tide of "high-tech patent issues."

One recommendation is to provide district courts with more discretion to award attorney's fees for abusive court filings. That's a concept that this column has promoted in the past for all kinds of lawsuits. It's a patently simple approach to tort reform that can be boiled down to five words: If you lose, you pay.

The White House effort was quickly applauded by the NRF and the Retail Industry Leaders Association.

Upfront adds its voice to the chorus.


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