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The first and most important thing to say about the Innovation Act introduced into Congress yesterday by Representative Bob Goodlatte (and published online here by the EFF) is that its effects will not just be felt by “patent trolls”. Instead, if the proposed legislation becomes law it will have a direct impact on any party – operating company or NPE – seeking to assert its patents in the US. Thus, even though it is being framed as “anti-troll”, it is not; it is anti-plaintiff. It would make going after alleged infringers harder, more expensive and riskier. There can be no argument with that. And because the act is anti-plaintiff it must by definition be regarded as pro-defendant. Not just pro “good” defendants who may not have infringed anything or may have infringed unwittingly, but also “bad” defendants – the ones that know they have infringed and have infringed deliberately. Among the parties most likely to be put off asserting their patents as a result of the Innovation Act 2013 are resource light lone inventors and SMEs who feel that their rights are being infringed by bigger entities. Thus, the Goodlatte legislation may inadvertently provide further incentives to copy and fewer to invent. That could prove to be detrimental to the US economy and is possibly not what the congressman intends.
The second thing to say is that the Innovation Act has been introduced on the back of a lot of anecdote and a lot less data. Some of the data that is currently used to justify what would be a wholesale reform of the patent litigation system that has developed in a country which has led the world in the roll-out of sectors as diverse as computer software and biotechnology is not exactly reliable. We still do not know whether there really is a significant “patent troll problem” in the US or whether anything that so-called trolls do disincentivises innovative activity or in any other way harms the US economy. However, much of the media and the political class has been convinced that a genuine crisis is unfolding.
This takes me to my third point: the Innovation Act 2013 is a triumph for those who have been extensively lobbying in Washington DC for reform while also building a media narrative about a failing patent system. They will look at the legislation and feel that all the investments they have made represent money that has been very well spent. The motives of some of these players are undoubtedly as pure as the driven snow; those of others may be less so. It just so happens that making it more expensive, more complicated and riskier to sue someone you think is infringing your patents suits the business models of certain types of company that have been calling vociferously for change. That may be a coincidence; it may not be. People will have their opinions on that. Hopefully, at some stage legislators and their aides may get round to thinking about it.
The fourth thing to say is that there is plenty in the legislation that, on balance, should be welcomed. More transparency is a good thing – it’s right that we should know who stands to benefit financially and otherwise from a suit being filed and won. Loser pays will undoubtedly make those seeking to assert trivial, poor-quality patents think twice. It is unjust to target the end-users of a product that may infringe. If the Goodlatte legislation does pass, it will further incentivise the creation of quality patents. It will probably also make them more valuable. That has to be seen as a positive.
The fifth thing to say is that the Innovation Act 2013 is not going to make NPEs or even bottom feeding trolls go away. The richer players will live with its provisions in the way that the rich operating companies that seek to assert will live with them. They will no doubt redouble their focus on acquiring good quality rights (something they are doing already), they may be slightly more guarded about initiating action, but in the end they will conclude that the upside is much greater than the downside and will pretty much carry on as they have done before. For their part, the bottom-feeders and the chancers will look for loopholes and will continue to prey on the unsuspecting. If they get challenged they will walk away. But it will still be worth sending out those letters because many businesses will have no idea that they have any other option than to pay the licensing fee that is being demanded of them.
All of which leads to the final point. The Innovation Act 2013 will not end calls for reform. When everyone sees that it has not really made that much difference to the activities of “trolls” they will be back in front of Congress demanding more change. But by then they will be talking directly about the patentability of some technologies rather than litigation. This is a long-term game.
IP politics, IP litigation, Patents, IP business