Patent Reform Bill A Good Step, But Still Falls Way Short Of Fixing A Broken System

from the it's-a-start dept

As was widely expected, earlier this week, a bunch of high-profile Senators introduced a big patent reform bill, known as the Protecting American Talent and Entrepreneurship (PATENT) Act. It’s backed by Senators Chuck Grassley, Patrick Leahy, Chuck Schumer and John Cornyn, and has a decent chance of becoming law. From a quick look at the bill itself, it looks an awful lot like what we expected to show up last year, right before Senator Harry Reid stepped in and killed the bill. With the Republicans taking over in Congress, however, Reid no longer has the power to do that. Meanwhile, Schumer, who has long been supportive of patent reform and is basically taking over Reid’s leadership position as Reid prepares to retire, has declared that this time the bill is getting done.

That’s all good. The bill is a good start. But, unfortunately, it’s not nearly enough. It does target some of the symptoms of the problems of the patent system, but does little to fix the underlying causes. The bill targets the worst of the worst: the patent trolls who thrive on shaking down companies. Specifically, the bill aims to do a few key things:

  1. Fee shifting on ridiculous lawsuits: It would allow for attorneys’ fees to be awarded if the patent holder was not “objectively reasonable” in filing the lawsuit. The Supreme Court has already made it easier for courts to award attorneys’ fees, but this would slide the scale over a bit in a helpful way. This certainly increases the risk for patent trolls who have no real case.
  2. Limiting discovery: Defending a patent lawsuit is crazy expensive. We often hear stories of it costing like a million dollars just to get to trial. And one big expense is “discovery,” in which the patent holder gets to ask for all sorts of information from the company its suing — emails, plans, source code, etc. This process is super expensive and there’s not much you can do about it. It often starts pretty quickly after a lawsuit is filed as well. This new bill would put limits on early discovery, allowing those sued to seek motions to dismiss the case altogether or to transfer venues. That could decrease the early cost, taking away some of the pressure on defendants to just settle, and giving them more ability to fight back against bogus claims.
  3. Limits vague demand letters: The patent troll’s weapon of choice is often to send totally vague demand letters, insisting companies infringe without telling them how. It also makes it easier for the FTC to go after those who send such bogus threat letters.
  4. Protecting some end users: We’ve highlighted plenty of cases where patent holders sue those who make devices or software, and then sue a variety of end-users as well. This bill, in a fairly limited way, would put those kinds of lawsuits on hold until the manufacturer can fight the infringement in court. But this only counts if the troll also has sued the manufacturer. So it’s a bit limited.
  5. Transparency: The bill would make it harder for trolls to hide behind shell companies. This is a fairly big deal, as many patent trolls have a series of shell companies, and often you have no idea who really owns the patent. The bill will also require actual lawsuits to be a lot more clear in terms of what they’re actually suing over and why the defendant infringes (and what it infringes).

These are all good things, but it’s unlikely to truly be enough. Missing, unfortunately, is the expansion of a program that would allow the patent office to do a faster review of crappy patents, known as the covered business method (CBM) process. This is too bad — as this was an idea that Schumer had been a strong champion for, but which Microsoft and IBM pushed back very hard on, as they HATE the idea that the USPTO might start invalidating their crappy patents with a quick review.

Yet, as Schumer knows well, this CBM tool has proven tremendously effective in dumping a bunch of crappy financial services patents. Hell, just this week, DataTreasury, a massive trolling operation that has received over $350 million in settlements had its key patents invalidated via a CBM review. It’s too bad that program couldn’t have been expanded. Blame Microsoft and IBM.

But there are a lot of other problems that the new bill doesn’t touch at all. Yes, it may shut down the worst of the worst in trolling, but will still allow plenty of bad situations to flourish. Bad patents will still get through and be used to hinder innovation. The new bill does absolutely nothing to address the situation with independent invention either, and that’s a major problem in the patent space.

Either way, even with this incremental fix, it’s likely we’ll see a bunch of ridiculous claims that the above changes in patent law will somehow harm inventors, though, I can’t see how that’s true. As long as you’re transparent and upfront with how the infringement happens, and don’t file “objectively unreasonable” lawsuits, it seems like patents are still a powerful tool to demand money from companies.

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Comments on “Patent Reform Bill A Good Step, But Still Falls Way Short Of Fixing A Broken System”

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Anonymous Coward says:

Patent Abolition

The only reform the patent system needs is its final abolition. The lawyers have had over 200 years to get it fixed. Time is up.

The patent system is a job-killing disaster, used by abusive lawyers to impede progress and stop commercial competition from happening. It also stops follow-on innovation from anybody. As natural resources start to run out, we humans are going to need to get more innovative. Having the stupid government handing out commercial monopolies to various large old abusive players, is exactly the wrong thing to do.

It is time for politicians to start doing the thing they are always promising — encouraging “Jobs! Jobs! Jobs!” Monopolies are dangerous and harmful to the economy. Get rid of them.

Mason Wheeler (profile) says:

Re: Patent Abolition

Before advocating getting rid of something, you need to ask, “would I rather have this thing, or the problem that this thing solves.” Because this one’s a doozy, and the case could be made that we owe the entirety of modern civilization to the patent system.

The problem that patents solve is trade secrets. How big a problem is it? I’ve mentioned this before on here. The earliest known samples of steel date back to the 14th century BC. For millennia, the secrets of making steel were discovered, kept secret, then all too frequently lost again when the smith who figured it out died, time and time again. The only reason it didn’t happen again in the 19th century is because of the patent system, which required the details to be published in order to receive protection for this “new” invention.

And when that patent expired, cheap steel was available for everyone, and it kickstarted the Industrial Revolution, which gave us mass-produced steel. From the automobile and the skyscraper to the cutlery you eat with and the zipper on your trousers, steel is everywhere in modern life, and we’d never have gotten there without patents.

Yes, the current system is broken, but that means it needs to be fixed, not killed. Getting rid of it would mean going back to the old system of keeping new discoveries secret, which literally set civilization back by 3000 years!

Anonymous Coward says:

Re: Re: Patent Abolition

But we already have steel. Are similar things still happening, say in the last 30 years? Reverse engineering has advanced quite a lot, maybe enough that we don’t need patents.

It’s not like patents have replace trade secrets either. If they hold us back, it must be happening right now. Are there contemporary examples of (important) things people have been having a lot of trouble figuring out?

John Fenderson (profile) says:

Re: Re: Re: Patent Abolition

Mason Wheeler is correct.

“Reverse engineering has advanced quite a lot, maybe enough that we don’t need patents.”

Not even close. There are still trade secrets from thousands of years ago that we haven’t managed to reverse engineer.

“It’s not like patents have replace trade secrets either.”

True, trade secrets are still a thing, but there’s a lot fewer of them than there were before patents existed, and those that do exist tend to be for things that aren’t patentable (food recipes like the Coke formula or KFC’s spice mix, for example).

Patents exist to benefit the public by encouraging inventors to share their inventions with others. This information-sharing greatly accelerates our rate of learning overall and is exceptionally good for us as a species. Like Mason, I give a lot of credit for our current state of technology to the patent system.

Personally, I think there’s no question that patents are a good thing on balance. However, the current US patent system has some serious problems. So serious that I’m not sure that US patent law is a good thing on balance. But that is not a criticism of the idea of patents. It’s a criticism of US law.

Anonymous Coward says:

Re: Re: Re:2 Patent Abolition

Mason Wheeler is incorrect. Back in the day steel was a secret weapon. Does the US military publish all details of all their “secret” weapons?
Q. What have you been told about stingrays? A. Redacted.

Are we to assume that without patents people will quit making genes?

No one would ever think of ways to increase our food supply without patents? I guess we owe thanks to patents for Monsanto?

John Fenderson (profile) says:

Re: Re: Re:3 Patent Abolition

“Back in the day steel was a secret weapon. Does the US military publish all details of all their “secret” weapons?”

I’m not sure how that makes Mason wrong. Nobody is required to get a patent. If you don’t want to tell everyone how you do something, then you don’t patent it. Keep it as a trade secret.

But most innovators don’t have the need for such secrecy so the benefits of getting a patent exceed the drawbacks.

“Are we to assume that without patents people will quit making genes?

No one would ever think of ways to increase our food supply without patents?”

These are straw man arguments. Nobody said that inventing would cease if there were no patents. Patenting increases the rate of innovation by allowing inventors to learn from each other even if they don’t know each other.

Oh, and the genetic engineering thing is a bit of a red herring. I consider the ability to patent genes as one of the things that is wrong with the patent system right now. But it has nothing to do with whether patents as a concept are good or bad.

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