How Can We Stop Patent Trolls- H.R.9 Won’t Stop Them


If you are a REALTOR® then you received one of the emails from NAR asking you to contact your Senators to pass H.R. 9 for the sake of your business. If NAR was really so concerned about our businesses then they must also understand that we are not all just REALTORS® but also innovators and some of us own technology we invented and some of us run small businesses. The bill is not what the email said it was. I am embarrassed to say that I fell for it. And now, I am going to try to make amends by educating myself and you on what this bill is really going to do. 

As always, there are 2 sides to every bill, 2 sides to every argument. The biggest problem with passing laws contained in bills is 1. there is always more to it than what the people interpreting the bill lead on and 2. there are always unintended consequences to every law. 

When we face a problem or issue there are those who immediately jump on it and develop some kind of bill and run to legislate. I think that the politicians we send to Washington think they have to keep writing and passing new laws in order to feel as though they are worthwhile, like if they are not passing bills and laws they are not doing their job. But there are way too many laws now. Imagine passing laws every single session. Can you even add up how many laws there are now?

The REALTOR® Party sent out a call to action about the patent trolls that are out there ready to destroy your small business. This article is for all small business owners and entrepreneurs not just REALTORS®. 

The REALTOR® Party is admonishing each member to contact their congressmen and women to pass H.R.9 which the REALTOR® Party says will stop this abusive practice of 'legal' extortion over simple uses of every day technology such as your scanner and your drop down menu on your website.

I read the REALTOR® Party's call to action and I did contact the representatives of our area to ask them to stop this practice by passing H.R. 9. I am sorry to say, I reacted too soon. That is not like me. I usually study an issue very closely before deciding which action to take.

I also should have known better because the NAR was all for the ACA ( Obamacare) and we are suffering horribly from the health care laws that allow the IRS to extort money from us in the name of more taxes. I digress....

The issue is the NPEs that are trolling the patents and then becoming like the ugly trolls in Billy Goat's Gruff extorting a fee for crossing the bridge. There are people who will come after you and sue you for patent infringements based on patents they themselves did not create or invent. 

A friend of mine who is in a mastermind group with me stated that he met a man who does this for his business. He explained to my friend how he does this and my friend wondered how he lives with himself doing this kind of business which is obvious extortion. It is nasty and dirty business.

Unfortunately it is not as simple as passing H.R 9 to stop these trolls without hurting the true NPE's as there are good reasons to allow NPE of the original intent of the patent laws. The bad NPEs have taken advantage of this loophole to which our Founding Fathers did not intend. H.R. 9's language is too vague.  ​

Let's have a bit of history about the United States Patent laws. ​

NPE stands for Non Practicing Entities.  These include universities, research departments and start up companies who don't actually product their inventions themselves for many reasons. For startups this is usually because they don't have enough money to manufacture their inventions. For universities, the reason is obvious.  These instances greatly add value to our economy. 

This is also not a new idea. The Founding Fathers over 200 years ago also understood the value of adding to our economy by way of regular and poor people being able to invent products and then allowing another person to produce it. Even Thomas Edison did this.  The Founding Fathers wanted to stimulate our poor economy and this was a way to do it since in England ONLY the wealthy could obtain patents. 

In England you had to be very very rich and be able to pay for a factory to be built and hire the workers and so forth in order to manufacture an invention. This keeps innovation inside of a tightly knit group of wealthy people.

Our country is the first country in the world to have a patent licensing law and the right to resell your patents.  In early America, over 70% of all the patent owners had very little schooling. Even Thomas Edison had to leave school in order to take care of his family. 

By the time of the Civil War the United States had three times more patents than England did when we had double in population. Then soon after we had five times as many patents as England had. Because most of the people were poor that were inventing products about 85% of these patents were licensed. These licensed patents were so important to our early industrial revolution and growth our country had. 

For more reading on this subject here is an article you can read to get more details on Forbes:

In the last 30 years over 5,000 new products have been launched through this patent licensing known as NPEs. 

Stop H.R. 9 - new patents are more often licensed patents, save innovation 

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The patent trolls are nasty people who send you a demand letter telling you to pay up for infringing on their license fee by you not paying for the right to use the invention.  Some of these trolls buy these licenses in groups of a particular type of technology.  You get served this demand letter saying you have infringed. The letter warns you, you will get a declaratory judgment in court.  They extort money from you for what they call "license fees" to keep using said product. 

But the H.R. 9 bill does little to address the very issue that proponents are talking about. 

According to another opinion on Forbes: 

Under such proposals, if enacted, Congress would generally require more particularity in demand letters and lawsuits, shift both parties’ litigation fees to the losing side, limit often expensive and time-consuming discovery, require disclosure of all beneficial owners of asserted patents, and protect users and purchasers of alleged infringing products from suit unless the manufacturer had first been sued or if the manufacturer agreed to assume defense of the suit.

If the REALTOR® Party considers itself a party to represent the best interest of REALTORS®, it should be also foremost also should be proactive in protecting private property rights which is embedded in the NAR Preamble. Private property rights cover different areas and more than just land. Private property rights also entail the house you own, the production of your hands and brain, the material things you own, your own person and space around you. It also should include intellectual property rights as many REALTORS® have invented processes and systems for the real estate market and businesses. 

H.R. 9 passed the house by a big majority: 24- 8. 

To read the Judiciary Committee's press release on this passage click here:

Chairman Gootlatte said this: 

“At its core, abusive patent litigation is a drag on our economy and stifles innovation. It is a problem that impacts businesses and industries of all types and the jobs of the people who work for them, from the tech sector to the hospitality industry and even grocery stores. Everyone from independent inventors, to start-ups, to mid-and large-sized businesses face this constant threat. The tens of billions of dollars squandered on settlements and litigation expenses associated with abusive patent suits represent truly wasted capital – capital that could have been used to create new jobs, fund research and development, and create new innovations and technologies.

“The Innovation Act takes the necessary steps to address abusive patent litigation, while protecting legitimate property rights. Specifically, the legislation targets abusive behavior rather than specific entities, preserves valid patent enforcement tools, preserves patent property rights, promotes invention by independents and small businesses, and strengthens the overall patent system.”

The Bill now goes to the Senate. You can track the bill here:

The BIO tech industry organization is against H.R. 9 . 

Groups who are against this H.R. 9 bill say that this bill will stifle innovation by regular people and poor people. They are saying that this will undermine our patent industry and the patent laws which created the innovation we have been able to experience in our country. 

Will H.R. 9 Stifle innovation and small business patents?

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The biggest giveaways that something may be amiss with a bill is what they name the bill. If it something peachy and rosy and makes you feel good- it most likely is not. 

The Hill reported: 

H.R. 9, the ill-named “Innovation Act” will allow large, market-dominant firms to infringe with impunity, by making it much more difficult for small inventors to enforce their patents. Three years ago, the American Invents Act made it more difficult to get and keep patents. H.R. 9, purported to solve a patent troll problem, is instead the next step in crushing competition from new small firms, creating “Big Tech Patent Ogres” that can ignore smaller players and their patents. This new bill makes it almost impossible for small technology startups to enforce their patents.

​The Hill's has a very good article about the assault on small businesses this new so called innovation act is going to be:

How much of the H.R. 9 bill did the REALTOR® Party  and the NAR read? Did they read the entire bill? Did they discuss the ramifications with their legal counsel? 

And here is what Schmidt the  co-chair of the Small Business Technology Council has to say:

The U.S. patent system promotes innovation. H.R. 9 will retard innovation and cost America jobs and wealth. H.R. 9 is contrary to the Founding Fathers’ Constitutional intent, contrary to the policies of 220 years of patent law, and contrary to stated intention of the President and Congress to stimulate innovation. We urge the Congress, the White House and the SBA to oppose these potentially damaging changes, and instead support either the Troll Act in the House or the STRONG Patents Act in the Senate, both of which solve the troll issue, but do not hurt small inventors. If H.R. 9 becomes law as is, patent ogres will be a much worse problem than trolls could ever be.

"If H.R. 9 becomes law as is, patent ogres will be a much worse problem than trolls could ever be."

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Study the bills before you write your congress and representatives, study before you vote. Don't believe what you read. Explore, research, and most of all, read the bills! 


H.R.9, Patent Trolls

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