Government study calls for tougher patent reviews

{mosads}Industry groups claimed that the report shows the need to crack down on “patent trolls”—firms that use bogus patent infringement claims to extort settlements out of businesses. 

Numerous businesses have complained in recent years that they are facing an onslaught of patent complaints from firms that have no plans to create any products. Settling is often cheaper than fighting the charges in court. Several lawmakers have introduced bills to address the problem.

“We see this report as a sign that legislation is needed,” said Michael Beckerman, the CEO of the Internet Association, a lobbying group that represents Google, Facebook and other websites. “[The patent troll] issue is hurting businesses of all sizes across the country, and it’s hurting jobs.”  

In a statement, the National Retail Federation said the report affirms the group’s “position that patent trolls are increasingly threatening the U.S. economy.”

“Patent trolls are growing in size and strength and exploiting legal loopholes to extort hefty payments from American companies, ranging from retail to technology,” the lobbying group said.

But the GAO report found that “nonpracticing entities”—firms with no plans to create products—accounted for only one fifth of all patent lawsuits between 2007 and 2011. The agency also noted that many nonpracticing entities, such as universities, bring legitimate patent infringement claims. 

“Our analysis indicates that regardless of the type of litigant, lawsuits involving software-related patents accounted for about 89 percent of the increase in defendants between 2007 and 2011, and most of the suits brought by [patent monetization entities] involved software-related patents,” the GAO wrote.  “This suggests that the focus on the identity of the litigant—rather than the type of patent—may be misplaced.”

The agency found a major surge in patent lawsuits between 2010 and 2011, but attributed the spike to the anticipated passage of the 2011 Leahy-Smith America Invents Act, which made a variety of changes to the patent system, including limiting the number of defendants in a suit.