Patent Troll Crackdown Stalls as Debate on Reform Bill Delayed in D.C.

Updated: 04/10/2014 11:01 PM By: Stephen Tellier

From small businesses to some of our state's largest employers, it's an issue many Minnesotans are following closely. 5 Eyewitness News has previously reported on "patent trolls" targeting local businesses with demanding letters, threatening lawsuits. But the push to stop them seems to have stalled in Washington, D.C.

So many people just want to see patent trolls shut down. President Obama even mentioned the issue in his State of the Union address.

But on Thursday, senators pushed back debate on a patent reform bill for the fourth time in two weeks.

A patent troll targeted Bob Ten Eyck's packaging company, Ten-E Packaging, in Newport, Minn., claiming it was violating patents for scanners. He was told he could prevent a lawsuit -- if he paid $30,000 to $40,000.

"I just don't understand why people can't earn their money honestly and legitimately," Ten Eyck said last month.

But better protecting Minnesota's small businesses has become quite complicated.

"'Patent troll' is an interesting term, because, like beauty, it's in the eye of the beholder," said Brad Pedersen, shareholder and patent attorney with Patterson Thuente Pedersen, P.A. in Minneapolis.

As a patent attorney, and inventor himself, Pedersen knows the importance of patents.

"They're a part of what has made America the economic powerhouse it is," Pedersen said.

But he said abuse is only happening in one small corner of the patent world.

"It is the demand letters that really represent the biggest part of the abuse that's going on right now," Pedersen said.

The Patent Transparency and Improvements Act, which is still being negotiated before being brought before the U.S. Senate Judiciary Committee, does target such "bad faith demand letters." But lawmakers are also considering more controversial ideas like fee shifting, forcing the loser of a patent lawsuit to pay the winner's legal fees.

The battle has given birth to new groups, like The Coalition for 21st Century Patent Reform. 3M, Medtronic, Cargill, and General Mills are all members. The group wants reform that doesn't hurt innovation -- and the patent system that drives it.

"It's the way that large corporations can protect those profits so that they have enough money to invest in new products and new developments," Pedersen said.

Lawmakers said on Thursday that they have reached a compromise, but time is running out to get legislation passed before campaign season begins.

Both of Minnesota's senators sit on the Senate Judiciary Committee, and both are trying to strike a balance.

Senator Al Franken, D-Minnesota, released a statement: "There's a balance we need to strike here. We need to do more to protect businesses against companies that are abusing the patent system. At the same time, we can't change the system in a way that hurts Minnesota companies that have built their businesses around strong protections for intellectual property. I hope we can find that balance in this bill."

Sen. Amy Klobuchar, D-Minnesota, echoed a similar position: "From the Post-it Note to the Pacemaker, intellectual property is critical to the success of businesses in Minnesota and across the country. But too many bad actors are bringing up frivolous patent claims, creating a drag on innovation for companies of all sizes. I am committed to passing patent reform that both prevents bad actors from gaming the system and ensures that innovators are able to protect their intellectual property."