Posted: 12:05 p.m. Wednesday, July 24, 2013
By Eric Markowitz
Washington is finally getting serious about curbing patent trolls. Now if only Congress could funnel its enthusiasm into one comprehensive bill.
It's no big secret that the United States' patent system is broken. First, there's the excessive amount of time it takes to actually receive a patent. Then, of course, there are the trolls, who create massive litigation costs--especially for entrepreneurs.
Joel Spolsky, a software engineer who's writes a popular tech blog, explains this dysfunction well. He wrote recently:
Many patent owners, especially the troll types, don't really want you to avoid their patent. Often they actually want you to infringe their patent, and then build a big business that relies on that infringement, and only then do they want you to find out about the patent, so you are in the worst possible legal position and can be extorted successfully. The harder the patent is to read, the more likely it will be inadvertently infringed.
In June, the White House threw itself into the debate, proposing seven legislative recommendations, and five executive actions as part of a new "task force on high-tech patent issues." There are also six--yes, six--congressional bills on the floor right now that aim to curb needless patent trolling and make the system more efficient.
Which isn't actually a good thing. Several of the bills overlap in scope and none of them are predicted to get very far--not exactly surprising coming from a Congress that so rarely works together. So far, the patent reform battle is shaping up to be messy. On the bright side, six bills does indicate that the issue is gaining momentum.
Here's a look at the bills and what needs to happen to consolidate the best ideas into sensible and substantive patent reform:
Step 1: Make it more expensive for patent trolls.
Two different bills propose to make patent litigation more expensive, and thus, less attractive to trolls. A smart bill would borrow from them both. One is the Shield Act, which stands for Saving High-Tech Innovators from Egregious Legal Disputes. Initially introduced in 2012, it was expanded in February 2013 by its sponsors, Peter DeFazio (D-OR) and Jason Chaffetz (R-UT). The Shield Act aims to thwart frivolous lawsuits by requiring trolls to pay for defendants' legal expenses should they lose in court--a pretty big demotivator, if you ask me. "The bipartisan SHIELD Act is a targeted reform that will force patent trolls to take financial responsibility for their frivolous lawsuits," DeFazio said in a statement.
The other bill is the Patent Abuse Reduction Act. This one is a bit more technical than the others, since it deals with the procedural requirements for patent litigation trials. But the crux of it is important: it essentially puts added burdens on the litigator--usually a patent troll--to go into more detail as to why they believe the defending company infringed on a particular patent.
Step 2: Reform the U.S. Patent Office from the inside.
One of the major deficiencies of the U.S. patent system is actually something that doesn't come up very often: poor recordkeeping. This creates another problem, which is that it isn't always easy to know how to find who owns particular patents. The End Anonymous Patents Act, introduced by Congressman Ted Deutch (D-FL) back in May, proposes to solve this problem.
As the Electronic Frontier Foundation explains, "The law already requires parties to file notice when a patent's ownership is transferred at the Patent Office, but this bill would put real teeth in these provisions (which are often ignored) by making sure a patentee cannot collect damages if they had failed to meet this requirement."
If a business does come under attack by a troll threatening a lawsuit over potential patent infringement, the business owner needs a less costly way to fight back. A key provision of the Senate's Patent Quality Improvement Act could help in that regard.
This bill, introduced by Senator Charles Schumer in May 2013, expands something called the Covered Business Method (CBM) review. Under the Act, owners that are being sued can request the U.S. Patent Office to review a patent and investigate if it's too broad and the troll's claims are valid. Mind you, a CBM review would still cost you--about $30,000--but as the advocacy group Patent Progress points out, it's still cheaper than litigation. "Also, businesses threatened over the same patent can pool resources to jointly file a CBM petition," writes Matt Levy, patent counsel at the Computer and Communications Industry Association.
Step 3: Create a review process so that companies don't have to litigate over every patent claim.
Congress can go even further to give business owners a way to fight back against trolls. The more general STOP Act (Stopping the Offensive Use of Patents) introduced earlier this week by Rep. Darrell Issa, (D-CA) and Rep. Judy Chu, (D-CA) improves the existing CBM review process by broadening beyond just financial product patents to include "an enterprise" or "a product."
Essentially what this means is that the bill will allow the patent office to review the validity and scope of more patents in the first place, which, in turn, may make a patent troll's claim baseless.
"Right now, patent trolls are manipulating the overly broad and poorly determined patent definition to win settlements and damages from tens of thousands of real American innovators," Rep. Issa said in a statement.
Lastly, the courts can do their part, too. The Patent Litigation and Innovation Act would require the judge to hold the initial plea to a higher standard.
"By requiring more precision in initial pleadings, the bill would allow courts and defendants to better assess the legitimacy of infringement claims," notes the Internet Association, a group that supports the bill.
Comprehensive patent reform isn't going to come through piecemeal pieces of legislation. If Congress really wants to help the inventors, business owners, and entrepreneurs in this country, it will come together to craft a bill that goes deeper than any one of the six proposed. Focusing on these three issues--and some of the smart solutions on the table--is a good place to start.