White House Also Releases Report On Patent Problems

from the good-for-them dept

We’d already discussed President Obama’s proposals for patent reform, but now that the announcement is official, it’s worth also looking at the report about the broken patent system that was released at the same time from the White House, put together by the President’s Council of Economic Advisers, the National Economic Council, and the Office of Science & Technology Policy. It’s a quick read, but does cover many of the high points of just how broken the system remains. There’s a pretty good list highlighting problems with patent trolls:

1. They do not “practice” their patents; that is, they do not do research or develop any technology or products related to their patents;
2. They do not help with “technology transfer” (the process of translating the patent language into a usable product or process);
3. They often wait until after industry participants have made irreversible investments before asserting their claims,
4. They acquire patents solely for the purpose of extracting payments from alleged infringers;
5. Their strategies for litigation take advantage of their non-practicing status, which makes them invulnerable to counter-claims of patent infringement.
6. They acquire patents whose claim boundaries are unclear, and then (with little specific evidence of infringement) ask many companies at once for moderate license fees, assuming that some will settle instead of risking a costly and uncertain trial.
7. They may hide their identity by creating numerous shell companies and requiring those who settle to sign non-disclosure agreements, making it difficult for defendants to form common defensive strategies (for example, by sharing legal fees rather than settling individually).

Among other things, it shows just how much troll suits (what they refer to as “Patent Assertion Entities” or PAEs) have exploded in the last few years. Ridiculously, yesterday, we saw someone claim that trolling activity is a mere “anomaly” rather than a huge part of what’s happening with patents these days. It seems like this chart should put that claim to rest:

The report also does a nice job highlighting how obvious concepts and broad claims are being patented, and that this really needs to stop.

Setting an appropriate bar for novelty and non-obviousness is particularly important in a new field; if the bar is not set high (something difficult to do in a new field), firms may well find themselves inadvertently infringing patents, both because of the sheer number of patents and because commercial need is driving many inventors to create similar inventions near-simultaneously (Lemley and Melamed 2013). Many practitioners of such technologies (such as railroads in the 19th century and software today) find it more profitable to focus on expanding the overall market for their products by technological cooperation with rivals, rather than working to clearly delineate property rights (Boldrin and Levine 2013).

An additional reason that the issue of overbroad patents is particularly salient in software is due to the prevalence of “functional claiming” in these patent classes (Lemley 2012). A claim term is “functional” when it recites a feature by “what it does rather than by what it is” (In re Swinehart 1971). Functional claiming involves claiming exclusive rights over any device that performs a given function, regardless of how that function is performed.

The report cites many of the economic and legal studies we’ve discussed for years, and it’s clear that the people who put it together did their research. It’s nice to see this stuff getting the recognition it deserves. Now let’s see if it all leads to real change.

Filed Under: patent trolls, patents, white house