tej dhawan's random musings

Tag: grassley

Clubbing the Patent Trolls

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Image courtesy CEA (Consumer Electronics Association – ce.org)


I just wrapped up a very full day meeting in Washington with several Senators and their staff on the issues surrounding patent reform.  This day was coordinated by the Application Developers Alliance, an advocacy group I connected with in December around the time of the House vote on the Innovation Act (House Bill 3309). 
Before I go further, political correctness stalwarts as well as trolls themselves are calling for the name trolls be dropped and Patent Assertion Entities (PAEs) be used instead. I will use the term troll instead… it is not only the industry standard name, it also labels these entities accurately.
Imagine receiving a letter like –

Dear CEO – you owe us $1000 per employee at your company for each networked scanner that emails scanned documents and one or more of your employees potentially uses that feature.
or
Dear Kevin – we noticed that when you picked up groceries for your mom and sister during your recent shopping trip, and delivered them on your way home, you violated our patent on efficient routing for purposes of grocery delivery between retailer and one or more consumers. You owe us $1200 per delivery point for this violation.

Does either sound ridiculous? Yet, one is real and the other… well… the other could become real.  In the case of the former ‘letter’, a trolling entity has divided the US into territories where patent attorneys are actively sending demand letters to businesses using scanner to email function. Each letter demands the $1000 compensation. It has ticked off enough complaints and confusion in the business world that state attorneys generals have been called into action.
In a remarkable move, 42 Attorneys General have urged Congress to take action and to provide the Attorneys General to utilize the powers granted to them in assisting the citizens in their states and territories. This letter generated significant buzz during our visit and was largely being seen as a positive action toward patent reform.
Fast forward back to today – and what brought me here to DC. Meetings today covered members of the press, a dozen senators, a number of legislative staffers from senators’ offices, and two representatives from national VC firms – Brad Burnham of Union Square Ventures and Jason Mendelson of the Foundry Group.
Trolls aren’t a headache JUST for large technology firms. They are beginning to affect everyday businesses through measures that can best be described as extortion. Send vague letters to businesses large and small claiming that the business is infringing on a patent. Given them a short window to respond with payment or the penalty will go up. If the business chooses to litigate, the ‘fines’ will go higher and potentially private and personal information extracted through discovery of the company’s systems, mobile devices, phones, etc. This is a national problem that affects all of us and household names in my own state – Kum & Go, Bettrlife, Kinze Manufacturing,Iowa Bankers Association, HyVee and more have gone on record documenting their problems with trolls.
It was good to have two very large VC firms and a relatively small angel group represented in DC by our group of three. As Iowans we have an unusually significant sway – whether it is in the first in nation status in the caucuses to having two very senior senators who are respected universally. Senator Grassley’s position as a ranking member of the Judiciary committee makes him particularly powerful in this realm. Those who have read this know that I’ve spoken with him and his staff in the past about immigration issues and found him receptive – even though party politics (and the 2012) election rocked that boat past his control.
Patent reform has taken the form of a 325-91 support in approving the House bill (H.R. 3309) in December 2013.  The bill, also called the Innovation Act, immediately received support from the White House . The companion Senate bill (S.1720) was introduced in December and is currently being studied by the Judiciary committee while other bills make their way around the Senate. Our direct request today was for the Senate to move forward toward passage of patent reform in the senate that can pave the way to conference that will resolve the difference between the House and Senate bills before the President can sign it into law.
The key provisions we asked for are –

  1. Clear identification of who is suing (who has the financial interest in the claim)
  2. Clear identification of why the claim is being brought – specifically which portion of the company’s patent is being infringed
  3. Clear identification of how the infringement happened – specifically what did the infringer do wrong
  4. A fee-shifting provision (about who pays what)
  5. Potential for pre-litigation review of a business-process patent through an expansion of the covered business method statute

I reached out to several attorneys in Des Moines who are know for their work in intellectual property, including patents.  Several who represent small, innovation focused companies, warn of a chill that could befall such small companies due to the need for paying winner’s attorney’s fees, as they fear that large companies could simply bury the small company under legal costs. Similarly, members of the software community who have business process patents are naturally against provisions that could expand a review of a previously issued patent. I feel that the innovation community is at a greater risk of being attacked by trolls who are using old patents from now defunct companies. These patents, issued in huge quantities after their 1996 allowance, and bought up during the dot-com crash, now are utilized by entities that exist solely to litigate.
Though we haven’t seen this in the Iowa investment community, Jason and Brad both talked at length about how the companies they see closely tend to come into the trolls sights right about the time they receive serious funding or exhibit commercial viability and success. Companies are actively being formed to go acquire patents from companies in bankruptcy for the sole purpose of litigating with that portfolio.
The meetings at Senators’ offices proved very detailed. There was hardly any fluff in the 20-30 minutes we had with each senator, and the Senators and staff did an equal amount of talking and asking. Since we didn’t need to push an agenda with senators  who are already on board with patent reform, we offered help and the meetings entered meaningful discussion about ideas, alternatives, and potential solutions. Today, there are the Leahy-Lee (S 1720) and Cornyn-Grassley (S 1013) bills that represent the Senate position and the underlying conversations.  Sen Schumer adds teeth to the Leahy-Lee bill via Schumer (Senate 866).
I am a huge fan of the Cornyn-Grassley bill as it clearly covers most of my desired outcomes. Passed independently, either the Leahy or the Cornyn-Grassley bill would resolve a lot.  If Leahy-Lee-Cornyn-Grassley-Schumer got married into a single bill, our work today would be very productive.
I left DC with that hope, and plan to remain engaged with the Iowa Senators. The fitting end to the day was flying along side with Iowa Attorney General Tom Miller and being able to thank him on his action on this issue.
 

Immigration issues – revisited in DC


There is an eerie consensus across the aisle in DC that our current immigration system is broken, in need of reform, and change is necessary for the long term economic growth.  There is little consensus on how such reform will be achieved, who will lead it, and what will eventually motivate Congress into action.
Human Capital, impacted by immigration, was one of the core topics of the Des Moines Partnership’s DC trip this spring and I am privileged in being able to join business and government leaders from our region on this trip.  I am certainly privileged to work with Lori Chesser from the Davis Brown Law firm and invited to a panel on immigration.
The panel, consisting of Rosemary Gutierrez and David Johns from Sen Harkin’s office, Kathy Neubel Kovarik from Sen Grassley’s office, Aaron Brickman from Department of Commerce, Ben Johnson from American Immigration Council, and moderated by Lori Chesser was attended by various members of the Des Moines community and focused significantly on answering questions from the audience and thus remaining very interactive.
There are three forms of legal immigration today – 1) marriage to a US citizen, 2) sponsorship by an employer, or 3) sponsorship by an American citizen family member.  Being involved in all three forms, I felt comfortable contributing my experience and need for policy changes and bills currently circulating in DC.  I am married to a natural born US citizen from Iowa,  have sponsored, on my previous company’s behalf, several H1b candidates from India, Nepal, Indonesia and Vietnam, many of who are taxpaying residents, green card holders, naturalized citizens and contributors to Iowa and the US economy.  I am also sponsoring my sister, a Malaysian citizen to the US.
What is broken and in need of fix are the second and third categories.  Whether it is the HR3012 bill that allows green cards to be issued from the available pool rather than be artificially limited, the proposed StartupVisa that allows for foreign entrepreneurs to start their businesses in the US when sponsored by an accredited US investor, the DREAM act  or others, several solutions exist and are available to Congress.
What I heard from many during this recent visit to DC was that many in Congress would rather wait for a comprehensive immigration reform.  Both Senators’ offices comments were consistent that they prefer comprehensive reform such that visas should not take jobs from US workers, college seats from native US students, be considered comprehensively and not piecemeal etc.
Though a desire for comprehensive reform is respectable, Congress hasn’t shown an ability to work together toward real reform in my voting life in the US.  Furthermore, careers in STEM fields continue to be underfilled by software developers, doctors and  engineers.  Companies large and small, represented in the audience for our forum, continue needing to offshore their work in absence of sufficient resources here.
As Jim Clifton so clearly pointed out in Coming Jobs War, there is a marked change underway worldwide.  Qualified technology workers are finding an ability to find careers overseas and no longer want to stand in line as second-class citizens in the US.  Recent news reports are listed net-immigration from Mexico even to be zero, resulting in shifts even in the agricultural economies of Texas, Florida and California.    People are finding opportunities elsewhere in the world, and if we are unable or unwilling to bring job-seekers here, our companies will be sending the jobs overseas.
My message to the congressional representatives and other members on the panel was clear –

  1. We can’t wait for comprehensive reform.  To stem the outflow of jobs, we must tweak our immigration policy through bills like the HR3012 that received significant support in the house (373-15) but remain stuck in the Senate.
  2. Small and new businesses are the job creators.  Startups, a subset of the new businesses, are the high growth leaders in wealth creation that leads to more job creators.  The StartupVisa, as introduced by Kerry and Luger in 2011 needs to be addressed in Congress.
  3. Our colleges and universities are global leaders in education and attract students from around the world.  As we graduate them and give them options to intern/train via OPT/CPT statutes, we should allow them the ability to apply for a green card and legal employment at the end of the practical training rather than subject them to 3-10 years of servitude via the H1b program.  These students represent a large community of individuals who are establishing strong ties to America – we need to grow through them.
  4. Our schools and colleges are not graduating needed numbers of STEM fields.  While we build that population up through K-12 systems over the next 20-30 years, we should make our universities and colleges attractive globally through a foreign student program as attractive as the one I used when entering this US in the 1980s.
  5. The DREAM Act proposes to give children of illegal immigrants a legal way to stay in the country.  Whether it is the original Dream act or the modified version by Senator Marco Rubio, the purpose is the same – keep and grow with those who love and cherish America.

We do not have time for comprehensive reform, or does Congress show any willingness to bridge the divide, specially in this election year and beyond.    If you have any doubts about our place in the world, pickup a copy of Jim Clifton’s Coming Jobs War or Thomas Friedman’s many tomes, including That Used to be Us.

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