Lipinski Urges Federal Investigation of Patent Lawsuits Against Public Transit Agencies
U.S. Rep. Dan Lipinski (IL-3), Illinois’ senior member on the House Transportation & Infrastructure Committee, is formally requesting the Federal Trade Commission investigate “patent trolls” that are increasingly targeting transit agencies with questionable lawsuits claiming patent infringement. In a letter sent to FTC Chairwoman Edith Ramirez, Rep. Lipinski noted that at least 20 public transit agencies – including Metra – have been sued or threatened with lawsuits, oftentimes resulting in a “nuisance settlement” to avoid much more costly litigation.
“Patent trolls are stifling American innovation and, in the case of transit agencies, are draining financially-strapped public entities. This type of litigation undercuts the purpose of the patent system and exploits the fact that public agencies are at a disadvantage in defending themselves,” said Rep. Lipinski, co-chair of the new Public Transportation Caucus. “These lawsuits only hurt taxpayers in my district and elsewhere who rely on a vital public service, especially when many transit agencies already are struggling in these tight financial times.”
Patent trolls, more formally known as “patent assertion entities” (PAEs), are companies that do not sell, produce or invent anything, but acquire patents and, in turn, demand licensing fees from other companies through litigation or lawsuit threats. Although the claims may not have merit and many times target the end user and not the product producer, government agencies are reluctant to challenge them and settle to avoid legal and related discovery fees that potentially could cost taxpayers millions of dollars. Litigation tied to patent trolls cost defendants $29 billion in 2011, a 400 percent increase from $7 billion in 2005.
Just this week, the American Public Transportation Association (APTA) filed a lawsuit in federal court seeking to halt patent infringement claims against public transit systems throughout the country by two foreign companies. ArrivalStar S.A. and Melvino Technologies have sued more than a dozen transit agencies, accusing them of patent infringement by using GPS tracking systems that notify riders when their buses and trains are due to arrive. In one such case, Metra reluctantly agreed to a $50,000 settlement after weighing the potential costs of litigation.
“Our public transit systems have been improving the customer experience by providing real-time schedule and travel information to riders,” said James LaRusch, APTA’s Chief Counsel. “These systems, which are operating under severe financial constraints, are being saddled with these outrageous harassment claims that are a waste of time and money. This must be stopped.”
Rep. Lipinski is requesting the FTC identify the most prolific patent trolls and the financial interests behind them, the prevalence of patent infringement lawsuits against government entities and the cost to taxpayers, the impact of such lawsuits on the price of products sold to public agencies, and the effect the litigation has on innovation and competition between entrepreneurs who do government business.
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