Fix the right patent problems

“Stop the patent trolls!” is the latest rallying cry in the White House and on Capitol Hill.

Patent troll-bashing enjoys bipartisan support on the Hill, with a new (misguided) bill introduced nearly every month. It’s even reached the highest level of the administration, with the release on June 4 of “Fact Sheet: White House Task Force on High-Tech Patent Issues.”

A few months ago, on a Google “Fireside Hangout,” President Obama complained about companies that don’t actually produce anything themselves. They’re just trying to essentially leverage and hijack somebody else’s idea to see if they can extort some money out of them.
The president’s attack is surprisingly naïve for someone who was a professor of constitutional law.

Companies that buy patents are not “hijacking somebody else’s idea” — that sounds like theft or piracy. Companies that buy patents by definition PAY for that intellectual property.

{mosads}Suing someone — or threatening to sue someone — who is using your intellectual property without your permission is not “extortion,” any more than it’s “extortion” to sue someone who’s building a house on your land. The entire patent system is based on giving patent holders the right to exclude others for a limited period of time from using a patent without permission.

Much of the legislation introduced in this session of Congress, such as the SHIELD Act (H.R. 845) and the Patent Abuse Reduction Act (S. 1013) specifically targets Non-Practicing Entities (NPEs) or Patent Assertion Entities (PAEs).

The problem is that while there ARE real problems with patent litigation, NPEs and PAEs are not the source of those problems. They are merely a red herring that detracts attention from the real problems.

What are the real problems? There are two:

Weak patents: There are many ways a patent can be flawed: the examiner could have missed relevant prior art; a patent may have been granted for something that would have been “obvious” to a practitioner in the art; a patent may have been granted for non-patentable subject matter, such as a law of nature or abstract idea; or a patent may be overly broad.

Many companies — especially smaller companies — will pay a licensing fee if they’re sued for allegedly infringing a weak patent because they don’t have the financial ability or will to get the weak patent overturned. Beating a weak patent in court can be a pyrrhic victory, because it can cost far more to litigate than to pay a royalty.

Abuse of patents by disreputable players: Some patent enforcement companies are essentially scam artists. They buy patents on the cheap and “shotgun” threatening letters to small companies where there may be questionable or non-existing infringement, offering to settle for a royalty that is a fraction of the cost of fighting the lawsuit in court. These “patent extortionists” are the REAL patent trolls and should not be confused with legitimate NPEs and PAEs.

We’re all in favor of strengthening patent law. The America Invents Act includes provisions that help, but there is much more work that can, and should, be done in this area. The U.S. needs more patent examiners to clear the backlog of applications. Patent examiners need more specialized training, improved tools and technology, and more time to focus on each application, so that they can stop the weak patents that truly waste resources and inhibit competition. One thing Congress could do that would help is to stop raiding U.S. Patent and Trademark Office (USPTO) revenues for general funds and instead let the USPTO invest in upgrading its tools and people.

We’re also in favor of stopping abuses by patent extortionists. That’s why we came out in support of the End Anonymous Patents Act (H.R. 2024).

We support most of the proposals made by the White House Task Force — many of them would strengthen patents and help curb abuses.

Legislation that targets NPEs and PAEs does nothing to solve the two real problems — instead it furthers the agenda of corporate giants such as Google and Cisco by making it more difficult for individual inventors and small companies to protect their intellectual property.

PAEs and NPEs strengthen America’s patent system by providing inventors and patent owners with the ability to outsource the enforcement of their patents — an undertaking which is both expensive and requires specialized expertise.

America’s patent system is the strongest in the world. It is ironic that we would be weakening our patent system at a time when our global competitors — especially China and Europe — are moving to strengthen theirs.

Anything that encourages innovation is a good thing. Misguided “anti-troll” legislation that punishes inventors and cripples innovation is a bad thing. As the president and Congress take steps to solve problems in the patent system, it is vitally important that they address the real problems — and not the red herring.

Leff works for IPNav, a leading patent monetization company. He is an entrepreneur and co-inventor on two patents.