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Patent system stakeholders were addressed by Representative Bob Goodlatte at an event held by the American Enterprise Institute (AEI) in Washington DC yesterday, following the introduction of his proposed patent reform legislation in Congress on Wednesday. While there was much discussion on whether the provisions of Goodlatte’s Innovation Act 2013 go far enough to combat ‘patent trolls’, there were various hints and allusions from speakers and attendees as to what constitutes a ‘troll’ – but no solid definition of just what a ‘troll’ is.
Goodlatte told delegates at the event that his bill “takes meaningful steps to address abuses of the patent system” by ‘patent trolls’ – a term which he suggested is “an adjective, describing behaviour, rather than a noun”.
Questioning the claim that NPEs/PAEs/’trolls’ provide a valuable service to lone inventors and SMEs by giving them greater opportunities to enforce their patent rights, panellist James Bessen stated that only 5% of the money paid by defendants to NPEs ended up in the hands of original inventors. He further suggested that a much larger percentage of that money ends up being spent on “R&D being done by the troll organisation”. The idea that some so-called ‘trolls’ actually invest in innovation activities will surely come as a shock to a few of the most vociferous critics of NPEs.
Panellist Michael Beckerman, president and CEO of the Internet Association – a lobby group backed by Google, Amazon and Facebook, among others – felt that there is no need to pin down precisely what constitutes trollish behaviour. “I don’t think you necessarily have to define what a ‘troll’ is,” he said. “What is important is that the bad actors will look at [the Innovation Act] and be discouraged.”
But without an accurate definition of what a troll is, how can anyone on either side of the debate be clear on the extent of the perceived problem? And how can broad legislative reform of the US patent system be justified on the back of statistics that have been researched from loose definitions?
As pointed out by panellist Kevin Rhodes, chief IP counsel at 3M, we have to be able to know what a ‘troll’ really is before we can properly understand what impact they have on the patent system. “Part of the problem is how we define ‘patent troll’,” said Rhodes. “We haven’t heard any definitions today… we need to be careful about legislating for the fringe cases, which could harm the patent ecosystem as a whole. The market should determine who wins and who loses in the marketplace.”
Moreover, as this blog has stated before, it is unlikely that Goodlatte’s Innovation Act and the variety of other reform proposals currently before Congress will have a significant impact on the activities of the majority of NPEs/PAEs – or the smaller group of bad-actor, bottom-feeding ‘trolls’ that really do present a problem for the patent system – if they were to become law.
Speaking to IAM after the AEI event, Russ Merbeth, chief policy counsel at Intellectual Ventures, made clear that it would be his firm’s clients, rather than IV itself, which would be adversely affected by the Goodlatte bill’s provisions. “We’re generally supportive [of the idea] that there need to be tweaks to the litigation system… [but] it is the people not currently engaged in the [reform discussion] process that we are most worried about,” he said, referring to the lone inventors and SMEs that make up a significant section of IV’s client base. “Will they be able to manage [a reformed system] if they are a plaintiff trying to enforce their IP – and can they hang on during the whole of that [reformed] process?”
The Innovation Act will make it more difficult for patent owners to enforce their rights – particularly sole inventors and small businesses, many of whom will already feel that the costs and timescales associated with bringing an infringement action put effective enforcement out of their reach. That could actually benefit NPEs if SMEs see them as the only realistic way of enforcing their rights and assign patents to them as a result. And by making the enforcement process more arduous for patent owners, the proposed law could well make copying less risky for would-be infringers; although Goodlatte disagreed when IAM put this to him at the AEI event, replying that “fee shifting [as provided for by the Innovation Act] is not only on the plaintiff side, so both parties are under the burden of pursuing reasonable legal recourse and not frivolous legal recourse”.
We shall have to see if he is right about that. It strikes this correspondent to be pretty self evident that having to spend extra money on asserting a patent is likely to be a lot more burdensome for an SME plaintiff where cash is tight than for a big company defendant where it is not really an issue. If you can add a couple of million to a plaintiff’s litigation bill and either drive it out of business or force it to the negotiating table before a case is decided, that is exactly what you are going to do, isn’t it? The Goodlatte bill provides plenty of opportunities for this. That might be acceptable if we had any certainty about just how bad the 'troll problem' is, but we don’t. We don’t even have a definition for what a troll actually is. It is a worry that the congressman cannot see that is an issue.
IP politics, IP litigation, Patents, IP business