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NCTA Signs On to Fix Patent System

July 17, 2013

The Founding Fathers understood that in order to advance as a culture and as an economy, Americans needed to be able to share, and build upon, innovative ideas created by our citizens. As a result, the patent system was established to incent innovation and disclosure, allowing creators to widely distribute their invention under a limited exclusive right.

But today that system is breaking down in one respect. A new breed of speculators – not the creators themselves, but entities formed for the express purpose of accumulating and prosecuting the patent rights of others – is using the system to attack companies large and small, often under dubious patent infringement allegations.  This has at least two consequences.  First, the original inventors receive little or no compensation from such lawsuits, thus the original Constitutional “incentive” for creators to create is not being realized.  Second, the speculators often construe their patents over broadly and attempt to force defendants to pay a “ransom” in order to avoid the large cost of a patent infringement lawsuit.

Aptly known as “patent trolls,” these patent holding entities are disrupting the fundamental purpose of the Constitution, clogging the court systems, inhibiting new businesses, and preventing the progress of American ingenuity and technology.

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Currently, one patent troll claims to hold a patent that allows it to sue anyone creating a podcast. Another troll has filed lawsuits against anyone establishing a public Wi-Fi network. According to the New York Times, one entity sued 8,000 coffee shops and retailers for offering free Wi-Fi to customers.  These kinds of lawsuits are causing so much disruption in the technology and communications industry that NCTA and other organizations have drafted a letter to U.S. House and Senate leadership strongly encouraging serious efforts towards addressing the abuses of the legal system by certain patent trolls. The letter points out “since 2005, the number of defendants sued by patent trolls has quadrupled and…this activity cost the U.S. economy $80 billion in 2011.” Clearly, something needs to be done.

See the full letter here.

The letter has near widespread support and follows steps recently outlined by President Obama to prevent patent trolls from engaging in abusive behavior. The White House has established a task force on high-tech patent issues. Five executive actions and seven legislative recommendations have been designed to protect innovators from litigation and ensure only high-quality patents enter the system. And the National Economic Council and the Council of Economic Advisers released a report, Patent Assertion and U.S. Innovation, detailing the challenges posed and necessity for bold legislative action. You can see the full White House statement here.

Part of what makes cable such a high-tech success is its ability to create and deploy the latest technology to deliver broadband services to 93% of Americans, and to engage viewers with high-value content, making it easily accessible on consumer phones, tablets and other mobile devices. That’s why we’re working so hard to return the patent system to its intended purpose. We’re pleased to have such widespread support both from our peers in the technology and communications industry and with the Obama administration.