High-tech innovators and investors call for Congressional action on patent trolls


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More than 60 innovators, investors and entrepreneurs called on Congress Wednesday to act on legislation to trample patent trolls.

In a letter to the chairman and top Democrat of the Judiciary committee of the U.S. House of Representatives, the group urged to legislators to get the ball rolling on bills aimed at curbing litigation by "non-practicing entities, often referred to as patent trolls."

"Congress should consider measures that shift incentives away from those who game the system and toward an innovative economy and competitive market," the letter said.

The group argues that patent trolls are stifling innovation by targeting startups for lawsuits.

"While big companies paid much of the $29 billion in direct costs resulting from activities by patent trolls in 2011, the costs made up a larger share of small companies’ revenue," the letter explained. "In fact, the majority of companies targeted by patent trolls have less than $10 million in revenue."

"Without startups, there would have been no net job growth in the United States over the last two decades," it added.

Among those signing the letter to the committee was Mark Cuban, owner of the Dallas Mavericks and well-known entrepreneur.

"We have a shameful situation in this country, with patents and patent litigation hurting both competition and innovation," Cuban said in a statement. "That's bad for both consumers and small businesses. The time for Congress to act is now."

A proposed law is currently before Congress to address the patent problem. Called the SHIELD—Saving High-Tech Innovators from Egregious Legal Disputes—Act, the measure requires that if a patent troll loses in court because the patent is found to be invalid or there is no infringement, then the troll pays the other side's legal costs. Those costs can often amount to millions of dollars.

"It's time to force these trolls to take responsibility for the damage they cause with their bogus claims," EFF Staff Attorney Julie Samuels declared in a statement.

"The introduction of the SHIELD Act sends an important message to patent trolls: their business model is dangerous and their days are numbered," she added.

Other signers of the letter include managing directors of the Foundry Group, Jason Mendelson, Ryan McIntyre, Brad Feld and Seth Levine; Union Square Ventures managing director Brad Burnham; Reddit co-founder Alexis Ohanian; Memeo President George Northup; founder of Fry Electronics, William Randolph Fry; and Paul Sieminski, general counsel to Auttomatic, the company behind Wordpress.

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