Smart Business Online: Proposed patent reform bill will put a chill on innovation, by Christopher Hawker
This post originally appeared in Smart Business Online on May 6, 2014.
Christopher Hawker is a serial entrepreneur and inventor. He runs Trident Design LLC, in Columbus, Ohio, a product development and commercialization agency that specializes in helping independent inventors and startup hardware-based companies.
The words “patent troll” conjures an image of a nasty, devious being, bent on greedily demanding tribute from anyone seeking to cross the bridge. But by the definition in some of Congress’ recent proposals to address patent reform, that troll is me.
Under the cover of hard-to-oppose legislation aimed at curbing these horrible trolls, a group of powerful technology companies is aiming to weaken the entire patent system for their own benefit, and to the detriment of the very innovation ecosystem that helped give birth to these power players.
The scary thing is the speed and lack of deliberation that has so far gone into these bills. This legislation moved through the House in a matter of weeks and is moving through the Senate at a similar pace. We need to slow down.
This is in contrast to the last patent legislation — which I was fortunate to be at the signing ceremony for — that spent six years in Congress.
I run a company called Trident Design LLC, a product development and commercialization agency that specializes in helping independent inventors and startup hardware-based companies.
We don’t make any of the products we design. We license the designs and technologies to manufacturers that look to us, and companies like ours, for help thinking up and developing the next big thing.
The mechanism that makes this possible is the incredibly effective U.S. Intellectual Property (IP) system, embodied in our patent laws. The reason America is the most innovative country is because we have the strongest IP laws.
Defining the bad actors
So, who are these patent trolls, really? There are groups who use the patent system to shakedown small and large businesses alike.
They may send out thousands of demand letters to small businesspeople, threatening them with specious and vague claims, and demanding payment. Often, the demand is less than the cost of defending, so people just pay rather than spend time and money fighting it.
In this way, the trolls can collect millions.
Who else? There are companies that sue big targets like Google, hoping they can extract substantial sums to “go away,” even if their claims are very weak. There are other types of ploys as well.
In the mind of some large technology corporations, however, a troll is anyone asserting patent rights against them, even if it is totally legitimate. In fact, Intel executives who were waging a PR battle against people suing them, sometimes justly, created the word “troll” as a pejorative for patent holders.
Legislating too broadly
The problem with the proposed legislation is in an effort to combat a few bad actors it undermines the entire system by making it much riskier to try and enforce patent rights, an already incredibly expensive effort.
For example, one of the most dangerous provisions institutes fee shifting, where by default the loser pays the victor’s legal expenses. This dramatically increases the risk of filing a suit, and strongly favors the deeper-pocketed party.
This supposedly targets frivolous lawsuits, but the judge already has the power to shift the fees if it appears to be a frivolous suit. Making it the default assumes the patent holder is in the wrong.
There are numerous other provisions proposed with a similar pattern: An on-the-surface reasonable idea targeting a specific bad behavior that is written so broadly it captures all inventors, including me, as well as any university trying to license its IP, or any other “patent assertion entity.”
So, why would these large tech companies want to tip the scales? Because patents are field-levelers, allowing smaller players to compete with bigger players, who could otherwise use their superior resources to copy and crush emerging competitors.
If you are a company spending a billion dollars per year in royalty payments, why not spend $60 million to try and change the law? In this scale of war, companies like mine are just considered collateral damage.
Lobbying in Washington
I recently spent two days in Washington, D.C., with a group of other active inventors lobbying the Senate about this proposed patent legislation aimed at so-called patent trolls.
We met with over 25 Senate offices and had dinner with several Congress people, including Ohio Rep. Marcy Kaptur, making sure the voice of the independent inventor is heard before steps are taken that would destroy our businesses.
By coincidence a large group of major manufacturers, including 3M, GE and Microsoft, came out on our side the second day we were there. As a result, the vote on the bill was delayed.
Hopefully, it will be delayed even more, giving us time to assess the potential harm, as well as benefits, of each of the provisions. To be clear, I am in favor of addressing the problem of the real “trolls,” just so long as we don’t unintentionally put a chill on innovation in America.