The National Restaurant Association, joined by 36 state restaurant association partners, is calling on Senate leaders to support reforms that will provide restaurateurs and other technology end-users with relief from abusive demands from patent trolls.
In a letter sent today to Senate Judiciary and Commerce Committee leaders, the groups noted that restaurateurs have been increasingly barraged with ill-founded patent infringement litigation demand letters challenging the use of basic technologies, both in restaurant establishments and websites, as well as on individuals’ smartphones. The letter comes on the heels of today’s Senate Commerce Subcommittee on Consumer Protection, Product Safety, and Insurance hearing examining the impact of demand letters sent by patent trolls on small business.
“Patent trolls and their frivolous litigation demand letter claims are a drain on business and the economy, and it is critical that we reform the system to make it more difficult for the patent trolls to prey on industries like ours who add value to the communities we serve,” the groups wrote. The full letter is below.
Chairmen Leahy and Rockefeller and Ranking Members Grassley and Thune:
On behalf of our nation’s restaurant and foodservice industry, the National Restaurant Association strongly supports reforms to provide technology end-users with relief from abusive patent assertion entities’ (PAEs or patent trolls) demands. The restaurant and foodservice industry consists of roughly 980,000 locations nationwide with estimated sales of $660 billion accounting for roughly 4 percent of our nation’s GDP. The industry is also the 2nd largest private employer in the United States with over 13.1 million employees. Roughly 90 percent of the industry consists of small business owners.
This time last year, very few industry members had heard of patent trolls. Unfortunately, since then, our industry has been increasingly barraged with ill-founded patent infringement litigation demand letters challenging the use of basic technologies in our establishments, on our websites, and on individuals’ smartphones. Many of the technologies that have come under fire from patent trolls are ones that provide extensive value-added services to our customers, such as in-store Internet Wi-Fi access, online nutrition calculators, and restaurant locators on websites and in store-branded smartphone applications. The restaurant industry is constantly evolving to provide exceptional service to our customers. In the process, we work closely with innovative entrepreneurs in the technology space. Unfortunately, even the threat of litigation deters restaurants from partnering with new and innovative third-party technology providers. We in no way wish to inhibit small inventors and other patent holders’ ability to bring legitimate claims, but trolls, with frivolous claims, provide no value to the overall economy and must be tempered from steering valuable resources and time away from job-creating industries.
It is critical to create a more equitable and transparent environment that changes the economic dynamics for patent trolls. Currently, there is very little risk or exposure for patent trolls who send frivolous patent infringement demand letters. In order to shift these economic dynamics, patent litigation reform, and increased transparency on demand letters are key reform priorities for our industry, along with any other reasonable solutions that make it more difficult for patent trolls to prey on end-user companies, such as restaurants.
When a business receives a litigation demand letter, it has to weigh the validity of the patent infringement claims and make a decision about how to respond to the letter. Often, it is easier to settle even baseless infringement claims rather than fight the patent trolls because of the extensive time and resources it would take to litigate the claim. For all businesses, and particularly small businesses, the first step in this decision-making process is determining the legitimacy of the patent assertion entity’s claims. Demand letters often lack the information and transparency necessary for business owners to research and make a simple assessment about whether the patent infringement claim has merit. Requiring additional information and transparency on the actual demand letters, as well as increased information online at a trusted third-party website about pending patent litigation and patent troll companies, will help provide small business owners with a first line of defense to assess the validity of many of the patent infringement claims they are seeing at an increasingly alarming rate.
We are pleased that Senator Leahy and others have encouraged the Federal Trade Commission to utilize its existing authority and powers to combat abusive patent troll behavior, including egregious demand letter practices. We are hopeful that legislators will make demand letter transparency a top priority for any patent reform legislation as Congress moves forward. The bottom line is that patent trolls and their frivolous litigation demand letter claims are drain on business and the economy, and it is critical that we reform the system to make it more difficult for the patent trolls to prey on industries like ours who add value to the communities we serve.
Sincerely,
National Restaurant Association
Alabama Restaurant Association
Arizona Restaurant Association
Arkansas Hospitality Association
California Restaurant Association
Colorado Restaurant Association
Delaware Restaurant Association
Florida Restaurant & Lodging Association
Georgia Restaurant Association
Iowa Restaurant Association
Idaho Lodging & Restaurant Association
Illinois Restaurant Association
Louisiana Restaurant Association
Restaurant Association of Maryland
Michigan Restaurant Association
Mississippi Hospitality & Restaurant Association
Nebraska Restaurant Association
New Hampshire Lodging & Restaurant Association
New Jersey Restaurant Association
New Mexico Restaurant Association
New York State Restaurant Association
North Carolina Restaurant & Lodging Association
North Dakota Hospitality Association
Ohio Restaurant Association
Oklahoma Restaurant Association
Oregon Restaurant & Lodging Association
Pennsylvania Restaurant & Lodging Association
Rhode Island Hospitality Association
South Carolina Restaurant & Lodging Association
South Dakota Retailers Association
Tennessee Hospitality Association
Texas Restaurant Association
Utah Restaurant Association
Vermont Chamber of Commerce
Virginia Hospitality & Travel Association
West Virginia Hospitality & Travel Association
Wisconsin Restaurant Association
