White House Moves to Curb ‘Patent Trolls’

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White House moves to curb ‘patent trolls’
June 4, 2013 6:18pm

The White House moved Tuesday to crack down on abuses of the patent system, responding to mounting concerns from technology companies over a flood of litigation which some say stifle innovation.

The moves unveiled target so-called “patent trolls,” which according to the White House “hijack” ideas and take other companies to court with an eye to collecting license or royalty fees.

President Barack Obama issued five executive orders and called for new legislation to update a reform enacted in 2011, a statement said.

“Innovators continue to face challenges from patent assertion entities… that, in the president’s words ‘don’t actually produce anything themselves,’ and instead develop a business model ‘to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them,'” the statement said.

“Stopping this drain on the American economy will require swift legislative action… We stand ready to work with Congress on these issues crucial to our economy, American jobs, and innovation.”

The White House said new action is needed in the face of a flood of recent patent litigation, particularly in the smartphone sector, and because “several major companies spend more on patent litigation and defensive acquisition than on research and development.”

One of the signed orders calls for patent holders to have by default a “real party-in-interest” in a patent.

This is aimed at creating more transparency, and disclosing the true owners of patents, to prevent the use of secretive “shell companies” holding patents.

The president also signed measures aimed at ensuring “overall patent quality” to reduce the number of vague or broad patents which can be used to sue inventors.

The move drew praise from US technology lobby groups.

The White House action will help in “reining in abusive patent litigation,” said TechAmerica’s Kevin Richards.

With the bipartisan support this issue enjoys, those great minds who are creating the next disruptive technology in their basement or dorm room can look forward to a system that preserves their idea.”

Gary Shapiro, president Consumer Electronics Association hailed the move, saying Obama’s action “is on the side of innovation and job creation and against the spineless parasites of society who ruin American businesses.”

The Internet Association said it “applauds the executive actions” and added: “we echo the president’s call for legislation to put patent trolls out of business for good… patent trolls are nothing more than extortionists, abusing the court system to shake down innocent inventors, entrepreneurs and end users.”

Julie Samuels at the Electronic Frontier Foundation called the actions “big news” which address “on dangerous aspects of the patent troll business model.”

Dennis Crouch, a University of Missouri patent law specialist, said the moves are generally “welcome and will benefit the patent system as a whole.”

“In fact, this move to finally address the problem of predictability of patent scope and patent validity hits the sweet spot of where problems emerge in the system,” Crouch said in a blog post. “Of course, the devil will be in the details of these approaches.”

But Robert Stoll, a Washington patent lawyer who was formerly commissioner for patents at the US Patent and Trademark Office, urged a more cautious approach.

“The people who say the patent system is broken have another agenda,” Stoll said.

“The patent system is probably the best in the world, it is functioning. There could be some tweaks.”

Stoll said even the definition of patent troll is vague, because some holders including researchers or universities may legitimately want to hold the patents without manufacturing or selling anything.

“We need to look at these issues carefully,” Stoll said.

“We want to get rid of the bad actors but not the legitimate patent holders.”

Stoll said efforts to improve transparency are good, but noted that in view of the 2011 law enacted, “I think we need time for some of that to work.”

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