Grimm’s Fairy Tales Can’t Beat This: The Patent Troll and the White House

DMA members are familiar with the real monsters of our industry —whether it is a poor acquisition campaign, a new channel that seems to produce no revenue result, anxious regulators that want to crush innovation; privacy zealots that want ads to disappear altogether—but did you hear about the new horrifying one–the PATENT TROLL?  This is scarier than Grimm’s fairy tales about witches and wolves.

For innovators, and we know that marketing is all about innovating on a daily basis, these scary trolls have been wreaking havoc. Check out this graphic from the White House.

patent trollsThe White House, through its Council of Economic Advisors, the National Economic Council, and the office of Science and Technology Policy this week announced it will address the challenges of the trolls and has given them a nice name, the “Patent Assertion Entities” (PAEs), defined as entities focused on aggressive litigation, using tactics to threaten lawsuits against thousands of companies at once without any specific evidence, creating shell companies difficult to trace for the defendant, and asserting their patent covers inventions not imagined at the time they were granted. The White House estimates the PAEs have threatened more than 100,000 companies with patent infringement.

This is welcome news for the DMA.  Members have been concerned over the patent trolls circling them. According to the White House, the patent trolls target small, innovative companies (such as those in the marketing and advertising arena) as well as the end users of products. The DMA will be working with the White House and fellow associations to combat the patent troll in a variety of ways.

While software companies, advertisers and media and entertainment firms have been hardest hit by patent trolls, retailers are also vulnerable. A firm usually first hears of the PAE/troll via a letter that accuses them of violating one or two vague patents for using some widely adopted technology and asks for some sort of “licensing fee” of tens or even hundreds of thousands of dollars. While that is a lot of money, it’s often less than the estimated $2.5 mm it costs to bring a lawsuit. The trolls take advantage of – some say extort! – firms with limited options.

Let me recommend two great resources:

  1. An important report, entitled “Patent Assertion and U.S. Innovation,” prepared by the President’s Council of Economic Advisers, the National Economic Council, and the Office of Science & Technology Policy.
  2. The White House blog.

Going forward, part of the DMA’s arsenal is the establishment of a new DMA Litigation Center (DMALC)  which has been formed to protect the direct marketing industry in the legal arena. We will be seeking your financial support for the litigation center to allow the DMA to do battle against patent trolls and other litigation matters of national importance to the data-driven marketing community. If you wish to learn more, donate and get involved, please contact me or Jerry Cerasale at the DMA. Your support of our efforts will be invaluable for the protection of the direct marketing community!

For now—be on the lookout for the trolls.  Alert us if you run into them.

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