Obama Administration Takes Aim At Patent Trolls

February 21, 2014 | Charles Bowen

patent trollThe Obama Administration has finally taken action to curb the outrageous behavior of some companies known as patent assertion entities or, more commonly, patent trolls (referring to unsavory characters that demand payment from others to cross bridges they do not own). The White House and Congressional leaders have all been under pressure to take action to curb the costly and inefficient lawsuits that have plagued big tech companies like Google, Apple and Microsoft.

Experts say that patent trolls began gaining power within the past decade. Companies were created by investors with the sole purpose of purchasing or licensing thousands of patents from inventors, claiming to help small-time entrepreneurs by handing out cash. In reality, these patent trolls were amassing giant stores of patents that they intended to use as weapons to extract vast sums of money from all of the biggest technology companies in existence.

Tech firms have become increasingly vocal in complaining about the destruction wrought by the patent trolls. They claim that the lawsuits are stifling innovation and suffocating many young companies without the financial might to fight back. Even for those companies big enough to put up a fight against the patent trolls, they must be prepared to fork over huge amounts of money in legal fees, with industry-wide costs estimated to be in the billions.

To help combat the scourge of the patent troll, the White House said that the U.S. Patent and Trademark Office would issue new guidelines aimed at making it more difficult for the trolls to function. For one thing, the USPTO will be ordered to do a better job of recording the real owner of patents, noting every time a patent changes hands. Shell companies have been used to mask the true owner of many patents and the hope is that shedding some light on the process will discourage abuse. The new rules also say that both companies and experts will be allowed to challenge bad patent applications, hopefully preventing useless patents from being granted in the first place. These experts will be able to show the USPTO how new applications are similar to existing patents. Given that innovation is a prerequisite of a patent, such similarities should work to stop duplicative patent applications.

In addition to the guidelines proposed by the USPTO, two bills are currently before Congress that aim to tackle the same problem. Both bills include provisions that require those companies, or trolls, filing patent infringement lawsuits to clearly list which patents they say have been infringed. Though this seems obvious, in many cases the patent trolls never bother to explain to the targets of their lawsuits which patent is at issue. This is a consequence of "notice pleading," which currently only requires a Plaintiff to state the nature of their claim without requiring specific detail. The proposed law also encourages judges hearing patent infringement cases to award fees to the party that wins the lawsuit, a measure aimed at placing the financial burden of frivolous suits on the backs of patent trolls.

Companies across the country have their fingers crossed that one of the new proposals gains traction and succeeds in raining on the patent trolls’ parade. Whether the trolls simply find a new way around the laws remains to be seen.

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