Patent News

Mar. 20, 2015

The Hill Blog: Caution is necessary in patent ‘troll’ debate, by Christoper Cotropia, Jay Kesan and David Schwartz

This post originally appeared on The Hill on March 20, 2015.

There is a large push in some quarters for Congress to quickly enact major patent litigation reform. This effort has been supported by some in the business community as an effort to push back against so-called patent “trolls” that are asserting frivolous claims against businesses which cost companies billions a year. Others are using a report by the President’s Council of Economic Advisors asserting patent troll lawsuits more than doubled between 2010 and 2012. Taken together, their argument is that patent trolls have overtaken the patent system with frivolous suits, which are crushing small and large innovators.

To be sure, reducing frivolous lawsuits is a laudable goal and one we support. But we contend, as law professors whose research concentrates on empirical studies of patent law and patent policy, that decisions to overhaul a law as important to the U.S. economy as the patent system should be made only after a careful, objective, and data-driven analysis. As scholars, we believe that the empirical case for major patent reform has not been made.

First and most important, the current push for reform is based mostly on underlying data used in prior studies that is maintained as confidential, making these studies next to impossible to peer review and validate. While the norm in most academic disciplines is the public release of the underlying data, the same is unfortunately not the case in studies of patent litigation. The confidential data relied upon by most studies supporting reform was assembled by companies involved in defending lawsuits, which makes peer review all the more necessary.

Many of these studies also rely upon on an overly broad definition of patent “troll.” We note that the phrase patent “troll” itself is a loaded term, implying an evil creature demanding tolls from innocent passersby. The press characterizes them as shell companies who do not invent anything but merely buy patents to sue other innovative companies. In truth, patent assertion entities (“PAEs”) represent a wide range of entities, including universities, individual inventors, failed start-ups and companies, and speculators. Since many have included all of these diverse entities within their definition of patent “troll” and kept their data secret, we cannot evaluate the effect of removing individual inventors or universities, for instance, from their definition. And there is publicly available data to suggest removing such entities would dramatically change their conclusions. For example, in 2010, we found that 20-30% of patent lawsuits filed by non-manufacturers were filed by individual inventors (or companies formed and owned by individual inventors).