Patent News

Sep. 8, 2014

IP Watchdog: If Patent Reform Is Meant to Starve Patent Trolls, Why Is It Feeding Them Instead?, by Michael Gulliford

This post originally appeared in IP Watchdog on September 8, 2014.

Not a week passes without commentators extolling the need to remedy a “broken” patent system — a system where patent trolls (also referred to an “non practicing entities” or “NPEs”) that don’t manufacture anything can garner extensive licensing fees from companies, both big and small, which do. And as the debates surrounding NPEs rage on, so too do the calls for patent reform. But if the reform to date has had the unintended effect of creating more opportunity for NPEs, while making it substantially more difficult for innovators without millions of dollars in the bank to protect their intellectual property, shouldn’t we be wary of the harm future reform may cause?

Already, Congress has passed sweeping patent reform known as the American Invents Act (“AIA”). Implemented over a multi-year period, the AIA contains several provisions designed to disrupt NPE advantages and to make it easier for defendants in patent litigation to gain the upper hand. Whereas, for instance, NPEs could previously sue as many defendants as they liked, in one case and with one filing fee, the AIA changed that, requiring the filing of multiple cases and as many filing fees. But much more significantly, the AIA created a slew of game changing, “post grant” proceedings, run very much like mini-trials, which defendants facing NPE district court litigation can file in the patent office and yield to their significant advantage.

In addition to the AIA, Congress continues to put forth new bills designed to disrupt the business model of NPEs. In fact, the alleged need for patent reform is one of the rare issues that both Republicans and Democrat appear to agree on. Although recently declared dead in the Senate, revised patent reform bills and proposals will no doubt continue to propagate.

On the surface, the AIA and pending legislation would seem to be welcome developments. But the reality is not nearly as clear. In fact, if the patent reform that has already passed should teach Congress anything, it is the need to tread very delicately in the patent arena. The risks of severe, unintended consequences — particularly with respect to companies that are not even the target of patent reform — are just too great.