(Mountain View, CA) – The Assembly Select Committee on California's High Technology, chaired by Assemblymember Paul Fong (D-San Jose), held an informational hearing yesterday afternoon on the impact Patent Assertion Entities (PAEs) have on businesses and the economy. Panelists included leading patent law experts, the California Attorney General’s Office, as well as representatives from Netflix, California Medical Association, California Restaurant Association, Google, and other impacted businesses.
A White House report on Patent Assertion and U.S. Innovation found that the number of lawsuits brought by PAEs have tripled in the last two years, rising from 29 percent of all infringement suits to 62 percent of all infringement suits. Lawsuits brought by PAEs impact businesses across industry lines and range from major corporations to small businesses and start-ups.
“The information provided at the hearing today highlighted that the PAE issues are very real in the Silicon Valley,” said Assemblymember Fong. “We need to be able to strike a balance between protecting ideas and encouraging innovation. California is the nation’s leader on technology and innovation, and we can do more to seek that balance.”
“Introducing the federal Innovation Act provides an opportunity to curb patent trolls for their drain on U.S. innovation and our economic growth,” said Congresswoman Zoe Lofgren. “America's innovation economy is dependent on a functional patent system that promotes invention and competition. This bill is a starting point with additional refinement necessary. I look forward to working with Chairman Goodlatte and my colleagues on the Judiciary Committee in an open and constructive process to move forward the best bill possible to halt abusive practices and protect independent inventors with legitimate patent claims.”
“Thankfully, Skyfire and our customers survived frivolous litigation brought on by a patent assertion entity, and the claims were ultimately judged invalid in court,” said Jeffrey Glueck, CEO of Skyfire. “But the process had enormous cost on our small business, delaying the launch of our innovative technologies to help overcrowded mobile networks, and costing us millions of dollars from delays as well as legal expense. The time that was spent in courts could have been spent creating new jobs and products. Being based in Silicon Valley, there is a lot at stake, and we’re grateful to be a part of this hearing today.”
“PAEs are increasingly targeting companies lower on the supply chain, like retailers and even those who simply purchased off-the-shelf consumer electronics,” said Professor Brian Love of Santa Clara University. “In fact, this practice has become so common that today the majority of those sued by PAEs are small business outside the tech industry. These companies often lack the financial, legal, and technical resources to fight back and, as a result, are generally willing to pay substantial amounts to settle even extremely weak infringement claims.”
"Patent demands against companies in general, and startups in particular, have exploded in recent years,” said Professor Robin Feldman, Director of the Institute for Innovation Law at UC Hastings. “The economic and human tolls are great. When companies spend money trying to protect their intellectual property position, they are not expanding; and when companies spend time thinking about patent demands, they are not inventing. It is a welcome relief to see the Select Committee examining these issues."
Assemblymember Fong serves as Chair of the Elections and Redistricting Committee and is a member of the Higher Education, Utilities and Commerce, Water, Parks, and Wildlife, and Jobs, Economic Development, and the Economy Committees. In addition, Assemblymember Fong serves as Chair of the Select Committee on High Technology. He represents Campbell, Cupertino, Los Gatos, Monte Sereno, Saratoga, and the areas of Willow Glen, Cambrian, and Almaden Valley of San Jose.