In a world that thrives on new ideas and innovation, the new-age issue of patent trolls has become a concern for many, including the President of the United States. In Barack Obama’s most recent State of the Union address, he mentioned his concern for the issues stemming from patent trolls, discussing the rapid increase in patent lawsuits. Patent trolls are defined as companies who purchase patents, not because they manufactured the product, but simply to subsequently charge companies licensing fees to use the product. Part of owning a patent also gives the patent trolls the right to enforce their ownership through lawsuits and litigation if they feel they are being infringed upon. There has been an increasing number of these patent infringement suits, with Apple, Google, and AT&T each facing over one hundred of them since 2009. These lawsuits not only cost the company time, but it is estimated that for a suit with ten to twenty-five million dollars at stake, the average cost of litigation is 3.3 million dollars.
To address these concerns, The House has passed the Innovation Act of 2013, with it currently in debate at the Senate. The Innovation Act, which applies to both troll and non-troll patent litigation, will shift fees to the losing party. While this does sound like a positive change, the realities of the situation may lessen its effects. Particularly, because the Innovation Act applies to non-troll litigation it may have a “chilling” effect for bringing these suits, especially for smaller start up companies looking to enforce their patents but not wanting to risk having to pay the opposing party’s fees if they lose. Some do hope, however, that this fee-shifting provision will encourage patent trolls to ensure that they have a strong case before bringing a patent infringement law suit, although the patent trolls may not be as concerned about losing since many of the law suits settle anyway.
Another major patent issue is the process by which the patents are granted; generally, it is a one-on-one proceeding with the applicant and the examiner. On average, the examiner spends about eighteen hours going over each application. The real problem is that there is no effective way for the patent office to deny a patent application because there is no limit as to how many times an applicant can amend or re-draft their application. Patents have also been granted for inventions that should have never made it past the U.S. Patent and Trademark Office, which has also lead to a proposed reform of the current process. To specifically decrease the number of “bad patents” that are granted, part of the new process would involve companies and/or experts identifying “an existing patent similar to the application. Patents cannot be granted if there is no innovation.”
The U.S. Patent and Trademark Office is also creating an online “toolkit” which would enable companies accused of patent infringement to use the site to do research on the firm that sent the “letter demanding patent licensing fees so they can decide how to respond.” “The toolkit will include information and links to service and websites that can help consumers understand the risks and benefits of litigation or settlement and pick their best course of action. There is also a proposed rule that would require “patent owners to provide accurate ownership information,” with the hopes of making “‘patent troll’-type entities disclose their true parent or company owner.”
Despite these serious concerns, there are some upsides to patent trolls, most importantly for the actual inventors. Patent trolls provide lucrative benefits for the inventor who logically cannot bring their invention to the market themselves but provides them with the opportunity to still make money off of their hard work.
With the Innovation Act currently up for debate in the Senate and USPTO’s proposed changes and rules to the patent system, it is the hope of many, including the President, that most of these patent troll issues will be addressed in the near future.
* Samantha Berner is a second year law student at Wake Forest University School of Law. She holds a Bachelor of Arts in Criminology from the University of Florida.