Patent Trolls In The Sights?

President joins fight
Against patent law abuse;
Are trolls terrorists?

The White House and Congress have finally found something they can agree on: they don’t like patent trolls.

In the wake of legislation like the bipartisan “Saving High-tech Innovators from Egregious Legal Disputes” (SHIELD) Act, President Obama has issued a series of five executive actions and seven legislative recommendations “to protect innovators from frivolous litigation” by so-called patent trolls.

Patent trolls (more politely known as patent assertion entities or non-practicing entities) are companies that don’t produce the inventions covered by the patents they own but make money licensing the patent rights to others.

Some such companies have been accused of over-reaching.

According to the New York Times, one company threatened to sue 8,000 coffee shops, hotels, and retailers for patent infringement because they had Wi-Fi networks. Another company claimed that hundreds of small businesses were infringing its patents by using brand name document scanners.

As we recently reported, podcasters have come under attack by a company that owns a podcasting patent.

Suits by non-practicing entities now account for more than half of the 4,000 patent infringement suits filed in the US, up from 45% a year ago and less than 30% in all previous years.

However, contrary to assertions (including by President Obama) that such suits are “frivolous,” they actually succeed (or fail) at about the same rate as suits brought by practicing entities.

In the executive orders, the President ordered the US Patent and Trademark Office to require plaintiffs in patent suits to be more specific about what their patents cover and the nature of the claimed infringements. The President also told the USPTO to increase scrutiny of overly-broad patent claims.

The White House said a particular concern was to curb suits against consumers and small businesses that are only using off-the shelf technology – such as the scanner users.

John Boswell, the chief legal officer for SAS (a company that spent millions to defend itself against what it claims were frivolous patent lawsuits), recently referred to patent trolls as “terrorists” and suggested that it’s too easy for them to do enormous damage using modest resources.

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