Eye on Hospitality: Hotels Targeted by Patent Trolls

Eye on Hospitality: Hotels Targeted by Patent Trolls

By Paul Schlienz

One of the less than pleasant aspects of doing business today is dealing with patent trolls. Patent trolls produce nothing, but buy up vague patents and attempt to enforce their rights against accused infringers far beyond the patent’s actual value or contribution through hardball legal tactics. The hospitality industry, unfortunately, is very familiar with these bottom dwellers because many of our members have been their victims.

The latest patent trolling scam involves a Florida-based company called JBSHBM, LLC. Many hotels recently received a letter from JBSHBM, LLC, represented by Brian K. Buchheit, counsel. The letter alleges that hotels are in violation a patent owned by JBSHBM, LLC, related to the redemption of loyalty/reward points. The letter continues that JBSHBM, LLC, will not sue the property in exchange for a lump sum payment of $5,000 plus annual payments of $500 thereafter. The company has even set up a website with a “response deadline” countdown for when their offer of settlement will expire.

One of the targets of this letter, Choice Hotels, told its franchisees, on Aug. 2, “We believe that these claims are without merit and will be responding via our patent counsel. If you have questions or concerns about the claims made by JBSHBM and their legitimacy or their effect on your hotel, please discuss with your hotel’s legal counsel.”

Thanks to a recent U.S. Supreme Court decision, patent trolls are likely to face a more difficult legal environment. Until this May 2017 ruling, patent lawsuits could be heard anywhere in the U.S., giving trolls the opportunity to find courts where the odds were tilted in their favor. One notorious court that received many patent trolling cases and often ruled in favor of the trolls was that of the Eastern District of Texas.

The court voted unanimously that patent lawsuits should be tried where the defending company is based, rather than in a court of the plaintiff’s choosing. Potentially, this decision could shift many cases away from “plaintiff-friendly” districts, like East Texas, and toward more “neutral” venues where a defending company stands a better chance of fending off a suit.

“From here out, defendants can still be sued in a district such as E.D. Tex. if they have a regular and established place of business in it, but the decision is likely to shrink what I call… a jackpot patent litigation sector,” Walter Olson, a senior fellow at Cato Institute, told the Washington Post.

In the meantime, if you receive the demand letter from JBSHBM, LLC, do not make any payment, but consult your legal counsel. If you have any questions, contact Brian Crawford, vice president of government and political affairs at the American Hotel & Lodging Association.

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Categories: Lodging, News Room