Legislation Patents: Obama declares war on the patent trolls

Legislation Patents: Obama declares war on the patent trolls

2013/06/17

When ordinary activities like using Wi-Fi in a coffee shop or updating smartphone apps provokes lawsuits you know something is seriously amiss with the legal system. That has been the state of play for some time in the US – but perhaps not for much longer.

Recently US president Barack Obama announced a series of measures that he hopes will finally end the scourge of “patent trolls”. Identifying these trolls may not be so easy, though.

The term patent troll is slang for a firm that buys up obvious patents that the US Patent and Trademark Office (USPTO) should never have granted in the first place. The troll then “asserts” these patents by threatening to sue businesses that infringe them. Many will then settle out of court and pay an often business-crippling licence fee.

For instance, one troll with an obvious patent related to wireless networking sent letters demanding damages to 8,000 coffee shops, retailers and hotels because they were providing their customers with Wi-Fi. Another is demanding that app developers buy licences since it has patents for using apps to make purchases online. In 2011, Boston University’s law school estimated that dealing with patent trolling cost businesses in the $29 billion.

Obama says the cash should have been spent on generating products, services and jobs. So the White House is asking Congress to force the USPTO to narrow the scope of patents within the next six months so that whole fields of endeavour cannot be trolled. Obama also wants to prevent patents being asserted against the users of technologies, like coffee shops, rather than manufacturers. The White House says trolls will have to come clean about their identity, and not hide their “abusive litigation and settlement extraction” behind a thicket of shell companies.

“This is a bold step forward by President Obama, and if these legislative proposals are enacted the playing field will be levelled,” says Alan Schoenbaum, general counsel for web hosting firm Rackspace of San Antonio, Texas. What’s crucial, Schoenbaum says, is that Obama’s changes ensure trolls have something to lose when they fail in court. In essence, the US legal system is unbalanced. In the UK, for instance, the loser pays. “That keeps frivolous lawsuits down to a minimum,” he says. “But ‘loser pays’ is rare in the US.”

How do you identify these trolls? Plenty of ways, says Schoenbaum: “Trolls don’t invent, make or develop anything. Between 70 and 90 per cent of their patents are software or business-method patents, and in virtually all cases the patent is invalid.”

But San Francisco-based, “patent buster” Gregory Aharonian, who invalidates patents by finding previous inventions using the same ideas, thinks it will be tricky. “It is going to be hard for Obama to deal with the troll definition problem,” he says, mainly because some large technology firms behave like trolls when they assert overly broad or obvious patents they never exploit. “Anyone who asserts an invalid patent, under any conditions, is a troll.”

The only move that will crush the troll phenomenon is vastly improved patent quality, Aharonian says. “What upsets people more is not the assertion tactics, but the crap being asserted.”

Syndicated content: Paul Marks, New Scientist

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