How to Troll for Trouble without Really Trying
Intellectual property laws are extremely complex and theses complexities are increasingly exploited by patent assertion entities, more commonly known to us as patent trolls. These patent trolls are not the stuff of fairy tales. They are quite real, and the bane of businesses small and large; businesses that may find themselves targeted without having done anything wrong.
Patent assertion entities basically are law firms and/or companies formed for the express purpose of acquiring patents from struggling or bankrupt companies. They also buy up patents that are nearing expiration. These patents are then carefully researched to determine which businesses might use similar technology. Then the businesses are targeted for patent infringement litigation. These patent trolls have multiplied like rabbits since they surfaced in the 1980’s, accounting for as much as 62% of all patent infringement cases in 2012.
The Rise of the Patent Trolls
Apparently emboldened by successful outcomes, both in litigation and settlements, the patent trolls have steadily increased the number of cases, from 19 percent of patent infringement cases before the court in 2006, 23 percent in 2007, 26 percent in 2008, 29 percent in 2010 an 45 percent in 2011. The enormous costs associated with defending these types of suits often results in negotiated settlements that never reach the courts, suggesting that the problem is substantially larger than anyone realizes. The business community may have paid out as much as $39 billion to patent trolls in last year alone.
The financial impact of these acts goes well beyond the monies extorted through settlement and litigation. The threat of patent litigation has slowed innovation and cut off many new businesses at the knees. Numerous companies have raised their voices in protest.
Can Anything Be Done?
Sadly, without changes to current legislation, no viable solution to the patent troll plague exists. Few entrepreneurs are willing to build an enterprise on a technology that might be regarded as sufficiently similar to already existing technology and thereby, fall prey to patent assertion entities. Short of a diligent review of patents surrounding your product or service, there is little you can do.
Is Government Doing Anything?
There are two cases pending before the Supreme Court. These cases have the potential to mitigate the activities of the patent trolls, but that depends on how the court decides the cases. Currently, patent law is heavily weighted in favor of the patent holder which makes it very difficult for any business accused of infringement to win.
The best hope for relief comes from Congress in the form of legislation. Here are a couple of examples:
The SHIELD ACT
SHEILD, an acronym for Saving High-tech Innovators from Egregious Legal Disputes, is a bipartisan proposal from Democrat, Peter DeFazio and Republican, Jason Chaffetz. The general idea behind this bill is to throw up a financial barrier to patent trolls by making the troll responsible for all attorneys’ fees and court costs in the event the troll loses the case. The bill is very limited in scope and may do nothing more than create a bump in the road for patent assertion entities. However, it is a step in the right direction and a bipartisan one at that.
The “Discussion Draft”
This so-called draft hasn’t morphed into a bill just yet. Rather it is, as its name implies, a trial balloon of sorts, intended to foster thought and debate among legislators and serve as a basis for an eventual bill with some real teeth in it.
In its present form, the provisions of the SHIELD Act, the End of Anonymous Patents Act, the Patent Abuse Reduction Act and elements of the President’s recent executive actions have been rolled into this draft document. Also, the draft addresses some of the shortcomings found in the America Invents Act signed into law September 16, 2011.
The unique aspect of this “discussion draft”, circulated by Democrat Senator Patrick Leahy and Republican Congressman Bob Goodlatte, is that it does not attempt to define patent trolls, a point that has led to endless, unproductive debate in the past. Instead, the draft focuses on harmful behavior, making it less of a target for would be opponents.
Progress will no doubt be slow, but it is heartening to know that the problem of patent trolling is on the congressional radar and relief for small business and startups may be forthcoming in the not too distant future.