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Will we see globe-trotting patent trolls any time soon?



Peter Leung


As the calls for action against patent trolls gain momentum in the US, will NPE-related litigation increase elsewhere?

Earlier this month, the Obama administration detailed its plan to combat patent trolls. His plan includes both executive directives, such as requiring patent owners to report ownership details to the USPTO, as well as calls for Congressional action. This follows a number of bills, including the SHIELD Act and legislation introduced by House Judiciary Chairman Bob Goodlatte, also aimed at "patent troll-type behaviour" and to "correct the current asymmetries surrounding abusive patent litigation". The FTC is also expected to look into the issue.

Interestingly, while the matter has drawn considerable attention in other countries, patent trolls aren’t yet a major force outside the United States. In Europe, NPEs are still less active than in the US, perhaps due to key differences such as the unavailability of software and business method patents in many jurisdictions and fee-shifting provisions increasing the risk for losing parties.

In Asia, the practice appears to be even less common, again perhaps due to structural differences such as relatively small damage awards and sometimes a reluctance to grant injunctions when compared to the US. At Managing IP’s China International IP Forum last month in Beijing, a number of the audience members were very interested and well-informed about the issue, though it was clear that their questions stemmed from reading about cases abroad rather than first-hand experience with trolls back home.

Will NPEs expand their reach abroad, in light of the legislative challenges they are facing in the US? Some seem to think so.UK judge  Mr Justice Birss said in a speech back in April that there is growing concern among the business community about the issue, and there is worry that the unitary patent will give NPEs a new tool against companies.

Meanwhile in Asia, Intellectual Ventures, the original patent troll (or non-producing entity in its preferred parlance) has aggressive plans for expansion. Furthermore, the proliferation of low quality patents in China, already a challenge for companies interested in entering the market, may be the perfect breeding ground for troll-like behaviour. As Oliver Lutze of the EU Chamber of Commerce explained: "The market opportunities in China are very good … but sometimes the risk of being involved in a lawsuit or losing your core technologies needs to be balanced with the opportunities. For example, a company might look at China and see 50 utility model patents that can potentially hinder them. While you can invalidate a few low-quality patents, for cost reasons it is impossible to attack 50."

What are your experiences? Have you encountered or do you expect increased NPE activity in your jurisdiction in the future?

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