CHICAGO – Public transit agencies nationwide are being targeted with questionable lawsuits by so-called patent trolls squeezing settlements out of financially strapped public entities unable to mount legal defenses against claims they are infringing on intellectual property protections, industry representatives said Thursday.
Lawsuits or threats of legal action have been lodged against at least 23 transit providers in some of the nation’s largest cities, including New York, Boston and Chicago. Opponents say the claims are frivolous and are stifling innovation, costing taxpayers millions.
“We are seeing this huge onslaught of patent lawsuits,” said James LaRusch, chief counsel for the nonprofit American Public Transportation Association, which has filed a federal lawsuit seeking to protect its hundreds of member agencies.
Critics of the practice deride the firms as “patent trolls” because they appear to do little genuine business or technology development beyond buying up patents and using them to demand licensing fees from other companies.
Known in technical jargon as patent assertion entities, they have also gone after private-sector companies but are increasingly targeting public and governmental agencies. The resulting settlements are draining already-depleted public coffers.
The transit industry association is challenging the validity of the patents cited in the claims, but says many agencies have no choice but to settle to avoid litigation costs that can reach $2 million to $3 million even if successful.