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Mobile Bankers Applaud Obama Plan to Crack Down on Patent Trolls

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The plan President Obama announced Tuesday to crack down on patent assertion entities or "patent trolls" — companies that buy up patents to extract licensing fees — was met with approval by attendees at the Mobile Banking Summit in Miami.

Obama's plan would require patentees to file updated ownership information when filing a claim. It would let courts award attorneys' fees as a sanction for abusive court filings. It would permit a wider range of challengers to petition for review of issued patents before the Patent Trials and Appeals Board. It would protect consumers and businesses from legal liability when they use a product off the shelf and solely for its intended use.

The concept of patent trolling "is another evil use of lawyers," says Eric Lindeen, marketing director at Zoot. Most companies choose to settle such cases, feeding the patent trolls' business model, he points out.

Ray David, president of Point Bank, says his bank was recently named in a patent lawsuit against Fiserv. "The suit is about a product we bought but didn't use — we ended up creating our own technology — and it cracked us up that we're mentioned in the suit," David says.

The American Bankers Association also expressed support for the recommendations Tuesday.

"The risk of abusive patent litigation and disingenuous license fee demands by non-practicing entities or 'patent trolls' is a serious and growing problem for banks of all sizes," Frank Keating, president and CEO of ABA, said in a statement. "We sincerely appreciate the White House's announcement of a package of executive actions and legislative recommendations designed to protect against frivolous litigation and ensure high-quality patents. We are particularly pleased the package includes recommendations to address end-user and demand letter issues, which are very important to smaller banks."

A vendor executive at the Mobile Banking Summit who spoke off the record, whose company recently received a patent, notes that DataTreasury has been successful at getting large banks to pay it large sums due to its patent on image capture technology. "The company provides no value to the market," he says.

Patent lawsuits can complicate life even for a vendor that isn't targeted. "If we have 10 partners, and five have settled and five haven't, who's responsible in terms of that food chain?

"For us, it all comes down to, how do you define a troll? In our mind, it's a company that does not have a product, whose sole purpose is to pursue litigation against other companies," he said.

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