Aug 13, 2015

The Pinkston Group David Bloom co-founded restaurant technology startup, Ordx, in 2011. He says he was… more I always wanted to have my own business. So, a few years ago, I quit my day job at a safe Fortune 500 company, found a fellow Brooklynite as a partner and launched a Manhattan-based software company, Ordrx. We quickly attracted attention, venture capital, awards and customers. We were living the American Dream. Until a patent troll — a company whose only business is suing legitimate businesses to force expensive settlements — hit us with a frivolous lawsuit. These kinds of suits are incredibly easy and inexpensive to file, but fighting them can break a business, as it did to mine. The patent troll that came after my company forced us into court, made us bleed from legal bills and, in June, ultimately forced us to fold up shop. American Dream, meet the patent-extortion nightmare. At its peak, our restaurant technology company backed with $1.4 million venture capital from Google Ventures, 500 Startups and more had 20 employees. Today, business is closed, and my staff are looking for jobs. The software we built is helping no one. And I’m now back working for a division of a Fortune 500 company, rather than for myself. As Americans, we all hold basic rights — rights, for example, that protect us and our property from search and seizure, and from being sued in civil court without evidence. I cherish these rights. I want my day in court if I am charged with breaking the law. But patent law today offers none of these basic protections. Virtually anyone waving a patent — whether or not it’s relevant, whether or not it’s clearly defined — can sue me without evidence of infringement. And under the current system, I am instantly on the hook for hundreds of thousands (if not millions) of dollars to defend myself. I’m not alone. Eighty percent of patent-troll victims are small- or medium-sized businesses like mine, according to a Unified Patents report from the first half of this year. Patent trolls drain an estimated $80 billion a year from the U.S. economy in direct and indirect costs. That’s about $1.5 billion each and every week. And the trolls show no signs of abating. Patent lawsuits filed in district courts are up 13 percent in the first quarter of 2015 over the first quarter of 2014, and six in 10 of these patent-infringement suits were initiated by trolls. The good news is Congress has taken note. The Innovation Act, HR 9, introduced in the 114th Congress by Reps. Bob Goodlatte (R-Va.) and Peter DeFazio (D-Ore.), would put a stop to these economically destructive patent-infringement lawsuit abuses. Similar legislation sponsored by Sens. Chuck Grassley (R-Iowa) and Patrick Leahy (D-Vt.), the Protecting American Talent and Entrepreneurship (PATENT) Act, is making its way through the Senate. These bipartisan efforts would go a long way toward reforming the structural failings of our current patent-litigation system. Both bills include provisions to simplify the patent system, such as requiring plaintiffs to lay out the alleged infringements in their original court filings — an excellent step toward greater transparency and clarity. And they would put a cap on expensive document discovery demands, to limit eternal “fishing expeditions.” Under this legislation, my customers will be protected from being sued just for using my products — a common pressure tactic used by patent trolls. Most importantly, nothing in the Innovation Act or the PATENT Act will make it harder to get or legitimately enforce a patent. They simply curtail the worst abuses of the legal system to free real inventors — small businesses and large corporations alike — to focus on innovation instead of litigation. This legislation will unclog the courts so that real patent infringement can be addressed without delay. And, critically, it will give me back my basic right to build a business without the threat of a legal shakedown. In June, the House Judiciary Committee passed the Innovation Act by a 24-8 vote, and the Senate Judiciary Committee passed the PATENT Act 16-4. Now, both bills move out of committee and are expected to receive full House and Senate votes later this month. If someone threatens to break my legs unless I paid them off, we’d call it extortion and they could be arrested. But such threats happen every day in a world overrun by patent trolls. Pay your lawyer or pay your troll. There is no other choice. This is the complete opposite of what the constitutionally described patent system is supposed to support. I am the little guy and am thrilled Congress is stepping in to affirm my rights as a business-building, job-creating American entrepreneur. I urge Congress to pass this common-sense reform now, so that the next fledgling business doesn’t fall victim to the trolls. David Bloom is a fifth-generation Brooklyn native, and co-founder of Ordrx, a Google Ventures-backed restaurant-technology company that used data to create new ways for merchants and consumers to engage and transact. Want New York Legal Services news in your inbox? Sign up for our free email newsletters. Home of the Day