President Obama vs patent trolls: A tipping point in Washington
The White House’s anti-patent troll moves today have been hailed by startup advocates as an important step in reforming a patent system that stifles innovation and unfairly penalizes young companies. President Obama’s executive orders and legislative recommendations also show that the patent reform issue may have reached a tipping point in the US capital.
Citing a need to make it harder for patent-holding companies to embark on spurious litigation, the White House is introducing measures to improve patent oversight and education, and it has suggested several regulatory changes that would make life harder for the so-called “trolls.”
It has made seven recommendations to Congress intended to address some major problems innovators face. The measures would, among other things, increase the burden on patentees to fully disclose updated ownership information; loosen to requirements for contentious patents to be reviewed; and insist on “demand letter transparency,” meaning anyone filing claim letters against alleged infringers would have to make those letters publicly available and searchable.
The Administration’s five executive orders, which start taking effect today, require greater transparency in how claimants use shell companies to enable abusive litigation; improve public education, including the institution of a “plain-English web site offering answers to common questions by those facing demands from a possible troll”; and embark on an outreach program that will include six months of high-profile events across the country to discuss changes to patent laws.
“We stand ready to work with Congress on these issues crucial to our economy, American jobs, and innovation,” the White House statement said. “While no single law or policy can address all these issues, much can and should be done to increase clarity and level the playing field for innovators.”
The announcement has been greeted warmly by the tech community. Jon Potter, president of the Application Developers Alliance, which is currently hosting a series of discussions with developers around the country as part of a “Patent Summit,” said the White House’s action “moves the ball substantially.” Describing the set of proposals as a “remarkably rapid” response since President Obama first publicly spoke of his objections to patent trolls in a February Google Hangout, Potter said, “It's always very important when the President of the United States speaks emphatically and personally.”
“This is a big deal,” Potter added.
In that Hangout, Obama let rip against patent trolls. “They don't actually produce anything themselves," he said. "They're just trying to essentially leverage and hijack somebody else's idea and see if they can extort some money out of them.”
Patent reform has been a hot topic on Capitol Hill of late, with Reps. Peter DeFazio (D-OR) and Jason Chaffetz (R-UT) introducing the Saving High-Tech Innovators from Egregious Legal Disputes Act (SHIELD Act) to the House in late February. Two weeks ago, Reps. Bob Goodlatte (R-VA) and Patrick Leahy (D-VT) introduced a draft discussion of a bill that would reduce costs for the defense in patent litigation and allow a product’s manufacturer to block cases against its customers over alleged patent infringement. In the Senate, Sens. Chuck Schumer (D-NY) and John Cornyn (R-TX) have also introduced a bill to combat patent trolls, and Rep. Ted Deutch (D-FL) has yet another bill before the House. Both Reps. Goodlatte and Leahy are taking part in discussions on patent policy today on Capitol Hill.
Patent trolls were even a subject of intense scrutiny on NPR this weekend, when “This American Life” revisited and updated an earlier Planet Money story about Nathan Myhrvold’s Intellectual Ventures, which the show said takes the majority of profits from questionable patent lawsuits brought on behalf of murky shell companies. Lodsys, another infamous patent troll, has been suing startups in the name of protecting a patent that broadly describes the model for in-app purchases. “This American Life” cited several other examples of similarly broad patents that have been the subject of recent litigation, such as the use of wifi in businesses, and a digital backup system that covers everything from podcasts to cloud storage.
In response to today’s announcement, Mike McGeary, director of tech lobby group Engine Advocacy, said it’s refreshing to see the Administration responding to the challenges of patent reforms after forging discussions with some key players in the tech community. Engine has made immigration a focus of its lobbying efforts for the early part of 2013 but has been planning to tackle patent reform in the coming months. McGeary is pleased at how fast the discussion has progressed.
“I won’t say we’re surprised, but I will say it’s happening faster than we anticipated,” he said. “That’s good, because it’s happening fast, and it’s happening deliberately.” Now the task is for Congress to corral the good feelings and ideas into something workable, he said.
[Image via www.whitehouse.gov]