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White House Announces Initiative to Fight Patent Trolls

By William Peacock, Esq. on June 04, 2013 | Last updated on March 21, 2019

Patent trolls. Patent Assertion Entities. Non-Practicing Entities. Expletives.

Whatever you call ‘em, the holding companies that produce nothing for this country, yet buy patent assets and assert the associated rights, are a much-lamented plague on this nation’s economy, cost intellectual property-heavy industries billions in patent litigation fees, and are an absolute boon for the lawyers.

(Hint: no one cares about the lawyers, this writer included.)

The Leahy-Smith America Invents Act (AIA) has just barely begun to take effect, and many of its provisions were aimed at the patent troll issue. That hasn't stopped the White House from searching out other ways they can curb the abuse of the patent system.

The White House Task Force on High-Tech Patent Issues, per a press release, proposes these legislative reforms:

  • Patentees and applicants must disclose the "Real Party-in-Interest." That's right. Trolls sending demand letters, filing an infringement suit or seeking PTO review of a patent can't hide behind random holding companies (or under bridges). If they do, they face sanctions for non-compliance.

  • More discretion in awarding fees to prevailing parties in patent cases. We could go full English, but the White House prefers a more moderate proposal where district courts may award attorney's fees under 35 USC § 285 as a sanction for abusive court filings (much like the standard for copyright infringement cases).

  • Protect off-the-shelf use by consumers and businesses. Ever hear of the trolls that were suing scanner users for violating their patent rights? This proposal would protect against liability for a product being used off-the-shelf and solely for its intended use, especially when suit has also been brought against a vendor, retailer, or manufacturer.

  • Change the ITC standard for obtaining an injunction. Courts apply the traditional four-factor test in eBay Inc. v. MercExchange. You may not have read the eBay case. You do know the standard, however. It's the classic test. Irreparable injury. Remedy unavailable at law. Balance of hardships. Public interest. The ITC, as an administrative body, applies a different system. That's confusing.

  • Public filing of demand letters to curb abusive suits. This would absolutely help curb schemes like Project Paperless (scanner trolls) and Prenda Law (porn trolls). The trolls acquire patents for next to nothing, assign them to holding companies, and spam users with demand letters. This results in nuisance settlements to avoid litigation.

  • Ensure the ITC has adequate flexibility in hiring qualified Administrative Law Judges. More judges? We'll ignore all the federal court vacancies for now, and applaud this one. After all, more judges means more jobs for lawyers and more cases processed quickly through the administrative system.

  • In addition to legislative proposals, there are also executive initiatives planned, which, for the most part, mirror the proposals above.

As our country becomes more and more dependant on an intellectual property economy (as opposed to manufacturing or agriculture), it's becoming increasingly important to reduce the amount of money wasted on frivolous litigation and patent claims. These ideas seem like a great start.

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