Representatives of the U.S. hotel industry and online travel agencies are voicing support for legislation that would thwart patent assertion entities (PAEs), also known as "patent trolls," from targeting the travel industry.
PAEs, which make money by buying and asserting patent rights, have increasingly posed problems for technology and manufacturing industries, with companies complaining that they are being harassed by frivolous lawsuits.
In September, the Federal Trade Commission voted to seek public comments on whether it should hold hearings about the issue.
The American Hotel & Lodging Association (AH&LA) and the Texas Hotel & Lodging Association both went on record last month backing patent-transparency legislation because of what they said was a growing swath of hoteliers that had been sued by PAEs for installing wireless Internet services on their properties.
Specifically, the AH&LA said it was backing the Patent Transparency and Improvements Act of 2013 authored by Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.). Among other things, the proposed law would make illegal the practice of sending threatening letters without backing the assertions with facts. It follows a bill introduced by Rep. Bob Goodlatte (R-Va.) that would make the loser in a patent lawsuit pay the winner's legal fees.
"The hotel industry is seeing a disturbing rise in the number of frivolous lawsuits filed by predatory entities," AH&LA CEO Katherine Lugar said in a Nov. 18 statement. "These hotels and other end users are being targeted simply for offering wireless Internet access for guests, safety communications between employees and online ordering services."
Meanwhile, Texas Hotel & Lodging Association General Counsel Justin Bragiel was one of a half-dozen witnesses who testified before a Nov. 14 hearing by the House subcommittee on Oversight and Investigations addressing PAEs and their impact on the economy and technological innovation.
"Over the last year, almost 100 hotels in Texas have been subjected to lawsuits over alleged patent infringement, simply because the hotel operates wireless Internet devices," Bragiel testified. "We are being shaken down and forced into a settlement, simply for purchasing an electronic device."
How much PAEs cost the travel industry each year is not known, but analysts have estimated that the practice cost the U.S. economy more than $80 billion in lost productivity, settlements and legal fees in 2011. Those numbers have been rising rapidly as the number of U.S. lawsuits filed by PAEs jumped to about 3,000 last year, from less than 500 in 2006, according to a White House report released in June.
Within the travel industry, the impact of PAEs hasn't been limited to hotels; digital distribution channels have also been affected. Notably, the meta-search engine Hipmunk was targeted by a PAE during the summer of 2012, shortly after the company raised about $15 million in funding. Hipmunk said at the time that it would fight the lawsuit, though no details have emerged since on how that issue was settled.
The Travel Technology Association went on record in October supporting anti-PAE legislation, arguing that "defending against frivolous patent claims and lawsuits inhibits our member companies' ability to continue to innovate and drive travel and tourism in the U.S."
Robin Feldman, professor at the University of California Hastings College of Law, said she was not surprised that the travel industry has felt the impact of the practice.
"The travel industry is a vulnerable and tempting target," Feldman said. "The large players have deep pockets but would not necessarily have expertise on the patents at issue. The smaller players cannot afford patent counsel and might be tempted to simply pay the demand."
Follow Danny King on Twitter @dktravelweekly.