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December 5, 2013

Acting for Innovation

 

These days, labeling a company or an individual as a “patent troll” is much like claiming someone was a witch in 1692 Salem, Massachusetts. That is, without much critical thinking the entity is marched off to be burned at the stake whether or not it really is a troll. This problem largely results because a patent troll has yet to be defined with precision, but the very name “troll” does capture the imagination.
 
There are bad actors who bring, or threaten to bring, abusive, frivolous litigation that is designed to leach innovation of its value. While defining these bad actors is hard to do for legislative purposes, an effort should be made, with a clear line drawn between legitimate and abusive behavior.
 
There is nothing so mysterious as a troll, just as in Salem there was nothing so supernatural as a witch. Rather, old-fashioned trial-lawyer types are abusing the system. But the solution is not to outlaw the bad actor, just as eliminating the justice system or class action lawsuits is not the solution to opportunistic trial lawyers. Neither is eliminating business models a solution. The key to eliminating trolls is to focus on the system that enables such behavior.
 
In fairness, these trial-lawyer bad actors have also been provided a fertile field for their malfeasance. The litigation they threaten to bring typically takes advantage of low-quality patents—sloppily awarded patents that are vague and obvious, often covering commonsense steps that are performed every day in a number of businesses. Armed with ill-defined patents the bad actors threaten litigation against a broad swath of companies seeking settlements as the companies try to avoid costly litigation. In a word, it’s a shakedown. So, in the end, it’s the patent problem that must be solved.
 
It is here where legislative solutions, such as the proposed Innovation Act come into play. By making changes to the litigation process bad actors can be discouraged. Reforms can reduce the costs for defending against aggressive, abusive patent challenges, changing the economics of the litigation process, leading to greater options for those being challenged by dubious legal tactics. Instead of now having to settle because of the high cost of litigation, with costs lowered, litigation again becomes a viable and appropriate avenue for dispute resolution involving highly technical questions.
 
In all cases, both large and small defendants must be considered with care given to make sure that changes do not have an adverse impact on legitimate claimants, including those who are simply protecting their property. Not everyone who collects portfolios of patents for the purpose of licensing is a troll. Not every non-practicing entity (NPE) or “patent assertion entity” (PAE) is a troll.
 
Some have argued that fixes to the system should be put off while the system absorbs the changes already made in the America Invents Act, but when problems are spotted they should be addressed. The Innovation Act does just that.


 

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