Investors Sign Letter Urging Patent Reform


American investors do not like patent trolls. Today, 39 of the nation’s most prominent venture capitalists sent a letter to Congress urging comprehensive legislation to address the patent troll problem. Together, the signatories have aided the success of companies such as Netflix, Twitter, and Kickstarter, and they invest upwards of $1 billion annually to ensure that even more young, high-tech companies continue to grow and fuel job creation in the United States.

Investors are calling for Congress to reform the software patent system to protect these inventive companies against financially devastating and unnecessary patent troll lawsuits.

Ideal reform proposals would include a more efficient patent review process, greater transparency from trolls, limiting the scope of expensive litigation discovery, and protecting end users of technology.

A window of opportunity for these much-needed changes opened with the introduction of The Innovation Act by Senate Judiciary Committee Chairman Bob Goodlatte (R-VA) a few weeks ago. Now, investors are speaking out.

Here is the full text of the letter sent to Congress:

Dear Congress:

Each year, we invest hundreds of millions of dollars in software and information technology businesses and emerging mobile technologies. Together with other investors, we commit more than $1 billion annually in angel and venture capital, which ensures the continuing growth of young, high-tech companies that employ 1.4 million people. We are the fuel in America’s startup economy engine. 

We write to urge comprehensive legislation to address the troubling growth and success of the patent troll business model. Young, innovative companies are increasingly threatened and targeted by patent troll lawsuits. While big companies paid the lion’s share of the $29 billion of direct costs resulting from patent troll activities in 2011, the costs borne by small companies are a proportionately larger share of their revenues. In fact, the majority of companies targeted by patent trolls have less than $10 million in revenue.

Congress and the Administration are considering many different reform proposals. None alone will fix the problem, but together they will make a substantial dent in what one famous troll recently called “a new industry.” 

Successful legislation should make it harder to be a patent troll, and easier for targeted businesses to protect and defend themselves. Legislation should:

  • Make it easier to efficiently review patents at the Patent Office, as an alternative to litigation. 
  • Increase transparency by requiring patent trolls to specify, in complaints and demand letters, which patent and what claims are infringed, and specifically how the offending product or technology infringes.
  • Limit the scope of expensive litigation discovery.
  • Require patent trolls to pay legal fees and other costs incurred by prevailing defendants.
  • Protect end users of technology (e.g., wi-fi, printers and scanners, and APIs) from being liable for infringements by technology providers. 

Our Founders did not intend to incentivize patent trolling in the Constitution; nor did Congress intend the Patent Act to promote this industry. Comprehensive legislation to reduce abusive patent litigation will make the patent troll business model less attractive, and will protect software, mobile and information technology entrepreneurs. In turn, our digital economy will continue to grow and so will our national economy.

See the full list of signatories here