MUTH'S TRUTHS 09/17/2015

Time to Clamp Down on High-Tech Ambulance Chasing Extortionists

By Chuck Muth

Many in Congress have long advocated for tort reform to reign in lawsuit abuse by personal injury attorneys. 

And who doesn’t oppose protection/extortion rackets where bad guys shake down little guys under the threat of property damage, physical injury or worse (he sleeps with the fish)?

Well, Republicans in Congress have an opportunity to kill two of these birds with one stone.

According to the American Tort Reform Association’s (ATRA) mission statement…

“Aggressive personal injury lawyers target certain professions, industries, and individual companies as profit centers. They systematically recruit clients who may never have suffered a real illness or injury and use scare tactics, combined with the promise of awards, to bring these people into massive class action suits. They effectively tap the media to rally sentiment for multi-million-dollar punitive damage awards. This leads many companies to settle questionable lawsuits just to stay out of court.”

And according to Wikipedia…

“A protection racket is a scheme whereby a group provides protection to businesses or other groups…  Protection rackets tend to appear in markets where the police and judiciary cannot be counted on to provide legal protection, either because of incompetence or illegality. 

“Protection rackets are often indistinguishable in practice from extortion rackets since, for the latter, there will be an implied threat that the racketeers themselves may attack the business if it fails to pay for their protection.”

Now put the two together and you have a particularly odious hybrid preying on the high-tech industry today called Patent Assertion Entities.  Or as they are more commonly and appropriately called, “patent trolls.”

Patent trolls troll the countryside looking for opportunities to claim that unsuspecting businesses are violating a dubious patent claim of some entity, or a claim the troll has obtained from the original patent holder.

Then, much like an unscrupulous slip-and-spill, ambulance chasing, personal injury attorney, the patent troll goes to the business and demands protection money in the form of a “licensing fee.”  The targeted victim is advised that if he doesn’t pay up, the troll will sue him.

Often, today, the troll is himself a lawyer, thus making the threat of a lawsuit even more frightening and real to the average small businessman. 

Faced with the potential violence to the business owner’s bottom line, the mark often opts to pay the extortion/protection money rather than get dragged through the expensive and time consuming hell of defending himself in court even though the patent troll’s claim is paper thin.

As just one well-known example, small restaurant owners have been shaken down by a patent troll for nothing more than posting their menus online on their own websites.  These poor guys were threatened to either pay up or get sued. 

Many paid. 

The scourge of patent trolls has spread over recent year, harming innocent business operators and stymieing innovation.  And according to a 2012 Boston University study, patent trolls legal actions totaled some $29 BILLION in the U.S. alone.  And it’s surely higher today.

As the saying goes, there ought to be a law.

Indeed, there is a bill pending before Congress – the Innovation Act – which would clamp down hard on patent trolls.  It passed out of the House in 2014 but was killed by then-Senate Majority Leader Harry Reid, who never met a personal injury attorney he didn’t like, including this new breed.

But Republicans now control both the House and the Senate, and President Barack Obama has indicated support for reigning in the worst abuses of these modern-day high-tech legal extortionists.  So the Innovation Act should be a slam dunk for fast-track for approval, right?

Wrong.

For some incomprehensible reason, some REPUBLICANS in Congress – who surely should know better – are now siding with these high-tech protection racketeers and are gumming up passage of this desperately needed reform measure.

Demonstrating once again that the only thing more certain than the sun rising in the east is the ability of Republicans to never blow an opportunity to blow an opportunity.

Mr. Muth is president of Citizen Outreach and publisher of Nevada News and Views.