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To fight trolls, do we need more than good patents?

Peter Leung

There is considerable debate about devising policies to deal with patent trolls without killing innovation. Is the solution as simple as higher quality patents?

It’s been a busy two weeks in Asia. First, the IP Office of Singapore hosted its IP Week featuring its Global Forum on Intellectual Property, while this week a good part of the Managing IP team is in Shanghai for the Global IP & Innovation Summit. Both events feature great speakers from all over the world, bringing updates and analysis of the important legal developments in their jurisdictions, with a lot of discussions about NPEs and patent trolls.

Though some argue that the patent troll phenomenon is largely a US issue due to unique features of that legal system, the topic is still very popular on this side of the globe among both multinational and domestic Asian companies. This is understandable; many Asian companies are looking to expand to the US and EU markets, while those already doing business globally must deal with the problem. Simon Choi, head of legal at China-based TCL Multimedia, the third largest flat-screen television brand in the world, said today in Shanghai that large companies such as his have to deal with patent threats from many different types of plaintiffs, including NPEs. While most lawsuits are filed in the US and Europe, he said that he is beginning to see some filed in Japan and Korea as well.

Teresa Stanek ReaIn addition to talk about the threats posed by patent trolls, there was discussion of solutions as well. Acting USPTO director Teresa Stanek Rea (left), who spoke at both events, highlighted recent developments in the US. Along with promising initiatives such as the Global Dossier, which seeks to centralise IP prosecution information among the IP5, she pointed to the Obama administration much-discussed proposals to combat abusive patent litigation.

Of course, the concern with anti-troll legislation is that it may end up hurting entities that are not trolls. At the Global Forum on IP in Singapore last week, Marshall Phelps of IPXI expressed concern about some of the proposed anti-troll legislation, especially those that focus on the non-practising aspects of certain entities. Phelps pointed out that companies such as Qualcomm that simply design chips, as well as prominent research universities such as Stanford and MIT, are NPEs that may be caught by some of the legislation.

Former USTPO head David Kappos made a similar comment about those who he describe as “very smart people who question the fundamental necessity of the patent system”, who use the most abusive patenting practices as evidence that the entire system is broken. Kappos warned that it may be dangerous to make big dramatic changes to a system that he says has been responsible for the tremendous amount of innovation coming out of the US.

Phelps suggested that one very simple way to deal with patent trolls is to increase patent quality, which makes a lot of sense; a lawsuit enforcing a strong and legitimate patent is not considered patent trolling.

Is this enough? Can the trolling problem be largely dealt with just by addressing any patent quality issues we may have? Or are other proposals, such as those made by the Obama administration, needed? Furthermore, to avoid the problem of hamstringing “good” NPEs such as universities and research laboratories, can the problem be addressed by only using proposals that do not revolve around whether the entity is actually practising, such as awarding fees and costs to winning defendants in patent suits?

What do you think? And of course, if you don’t think patent trolls are a problem at all, we would love to hear your thoughts on the issue.


Article Comments

While perhaps more may be required, I believe that good patents will go a long way towards helping, although the evidence doesn't suggest it's what some people actually want. Having been an examiner in the EPO for over 24 years, my personal impression (note not the official opinion of the EPO) is that patent quality - or more accurately patent application quality - has been noticeably deteriorating in recent years. These days in my technical field (mechanics) I am seeing more and more applications which are drafted in such nebulous terms that it is not apparent what has been invented, even within the description. It is by no means uncommon that I could use the headings from the International Patent Classification alone to attack the novelty of claim 1. Here at the EPO we do have tools to combat this, in particular the clarity enquiry prior to search, and I do use them, but it is in the nature of clarity objections that the debate can prove difficult. It is understandable that applicants want to keep things open until they see where an invention is going, but this is only a small step from keeping things open so that you can plague the competition (or the general public) and it's a long way from clearly claiming your actual contribution to the art which, when all said and done, is what you should get a patent for. Strong accurate patents will protect the invention and will not unjustly disturb the general public, but will probably not optimise license fees. So are you looking for protection or income? I suspect that a lot of people are looking for income with little regard to the fair balance between the inventor and the general public, and thus suspect that the gap between a quality patent and a normal patent application is going to widen further. Obviously the wider the gap, the harder it is to close it, but that doesn't mean that it cannot be done.

John Yates Sep 13, 2013

There are two fundamentally different problems and they need different kinds of solutions. There are weak patents (primarily overly broad, or have prior art demonstrating obviousness) and there are weak cases (primarily non-infringement regardless of patent quality).

Patent quality can be improved through requiring functional claiming and greater novelty including the concept of invention with a degree of effort ("Genius is one percent inspiration, ninety-nine percent perspiration"). This will implicitly limit, but not eliminate, both business method and software patents.

Weak cases can be limited by greater transparency (in demand letters and complaints), higher pleading standards (requiring greater due diligence), limiting costs (e.g. non-core discovery), faster declaratory judgment, and a system of addressing attorney conduct since 92% of all filed patent infringement cases are settled.

Sanctions and fee shifting are not effective against shell company subsidiaries with no assets nor revenue. These remedies are only rarely applied to attorneys rather than their clients. Allowing zealous representation and courts only having visibility of one case at a time means that weak (though not frivolous) arguments will not be sanctioned. A separate system with audits (think: accounting) and points (think: traffic law) is needed with fines, suspension, probation and disbarment to limit the frequency (by defendant, not by case) of zealous behavior over time to prevent it becoming an attorney's business model. That is, there needs to be a focus on attorney conduct -- for all attorneys regardless of side or type of party. One is allowed to have occasional extreme zealousness, but one must pick such battles carefully.

Patent infringement lawsuits are not the only area where extortionate behavior is seen. Personal injury, medical malpractice, securities class action, federal ADA (especially in California), patent marking (historically; now not a problem since the AIA law requiring demonstration of harm), CA Section 17200, CA Prop 65 are or have been areas with significant litigation abuse.

Fundamentally, plaintiffs in civil law have power (e.g. discovery, specialization and scale) similar to a criminal prosecutor, but they do not have the prosecutor's "duty to seek justice, not merely to convict" or win cases and the level of the burden of proof is substantially lower. With patents as an asset, the plaintiff is not necessarily the inventor and with shell companies (and the corporate veil) there is additional asymmetry. The risk of focusing on solutions specific to PAEs or to patent law is that the problem will simply shift elsewhere (think: Whac-A-Mole®). When tort reform in Texas in 2003 limited medical malpractice pain and suffering awards to $250,000 resulting in a 90% drop of such cases there was a flight of associated plaintiff attorneys from Personal Injury (PI) to Intellectual Property (IP).

Richard Falk Sep 10, 2013

To fight trolls, we need to be clear what we're really opposed to.

Some organizations oppose ALL patent rights, and they decry any firm enforcing any patent … mostly, against them, naturally. That simply needs to be unmasked as an attempt to expropriate others' hard work.

Others somehow think that a patent loses legitimacy when it is treated as any other property may be, i.e., sold to a person other than the originator. Those who have this belief should be explicit about how our society will fund innovations if an inventor doesn't work for a guaranteed-stable megacorp.

And others are defining “trolling” as deceptive and exploitative suits against individuals and businesses that could not work if Americans had less expensive access to justice, or we adopted some standards for requiring a firm suing over patents to countenance class-action counter-suits, or other standards that rebalances power.

But right now, all IP, legitimate and non-, and all suits, are lumped together in our discussion. Let's have a clear notion of what we need to protect so we don't throw out the baby with the bathwater.

Walt French Sep 09, 2013

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