Retailers Ask Supreme Court to Let Patent Office ‘Apply Its Expertise

WASHINGTON, November 27, 2017 – The National Retail Federation today called on the U.S. Supreme Court to uphold the constitutionality of a process that allows many “patent troll” disputes to be heard administratively at the U.S. Patent and Trademark Office without the need to go to court.

“Retailers are innovators, and as a byproduct of this they are end users of hundreds of forms of advanced technology that allow them to deliver goods and services to consumers faster and for more value,” NRF Senior Vice President and General Counsel Stephanie Martz said. “Patent trolls have targeted retailers over and over again to try to extract extortionate settlements from these innocent users of products. The sensible way to resolve an infringement claim is to allow the patent office to apply its expertise rather than incurring high litigation costs. There’s no question that this process is smart, efficient and entirely within the authority of the office under the Constitution.”

The court heard oral arguments this morning in Oil States v. Greene’s Energy Group, a case that examines the constitutionality of the “inter partes review” process. Under IPR, disputes can be heard by the agency’s Patent Trial and Appeal Board, an option that can resolve allegations more quickly and with less expense than full-blown patent litigation.

“IPR creates an efficient and constitutional mechanism to resolve certain disputes about a patent’s validity,” NRF and the Retail Litigation Center said in a friend-of-the-court brief filed with the Supreme Court in October. “Retailers favor the availability of IPR because the PTAB can expunge invalid patent claims without the burdensome cost and winner-takes-all posture of litigation and settlement.”

“The IPR process has successfully eliminated and deterred litigation based on dubious patent claims and saved retailers and consumers millions of dollars annually,” the brief said. “If this court interprets the PTAB as unconstitutional … the retail industry will have less ability to protect itself against the threat of infringement liability of invalid patents and consumers will unnecessarily pay higher prices and suffer loss of competition for reasons wholly unrelated to scientific progress and innovation.”

In addition to filing October’s brief, NRF has strongly supported patent litigation reform in Congress because retailers have been heavily targeted by patent trolls. The trolls are companies that purchase often-obscure patents for technology they did not invent, then demand licensing fees from retailers and other business that often do not realize the technology is even patented. Trolls usually lose in court, but court costs are so high retailers are often coerced into a settlement.

NRF is the world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries. Retail is the nation’s largest private-sector employer, supporting one in four U.S. jobs – 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation’s economy.

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