Obama says patent trolls “hijack” and “extort;” So do something, Mr. President

Jeff John Roberts — Sat, 16 Feb 2013 15:30:03 +0000

GigaOM’s regular readers are familiar with the plague of patent trolls. These are shell companies that don’t make anything but instead amass old patents in order to demand licensing fees from those that do. Startups are frequent targets for the trolls and those who resist are dragged into multimillion dollar litigation they can’t afford.

The patent troll problem, widely exposed by NPR in 2011, has long infuriated real companies and the tech sector. And now people in high places are starting to notice.

This week, a young woman told President Obama in a Google Hangout that she and other entrepreneurs live in fear of patent trolls and asked if he planned to continue patent reform. In response, the president made his boldest statement to date on the issue:

“The folks that you’re talking about are a classic example; they don’t actually produce anything themselves. They’re just trying to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them.”

It looks like common sense has come even to the highest halls of power (see interview and transcript here via Patent Progress). The question now is whether President Obama will actually take charge and do something about the patent plague that is sucking money out of the most innovative sector of the economy.

In the past, the president has proved adept at throwing sops to his fans and fundraisers in the tech sector without doing much to help them. In 2011, for instance, he signed the America Invents Act, which was a milquetoast measure to fix the worst elements of the patent system. While the law made it easier to challenge bad patents, it didn’t reign in absurd jury verdicts or overly broad patents that enable the trolls in the first place.

It’s time for the president to try again. To do so, he will first need to get around the specific concerns of the pharmaceutical industry, which has blocked previous patent reform efforts; as Judge Richard Posner has noted, drug makers are among the few who may need the monopoly power of a patent in order to recoup their investments. This is not the case for software and tech where a first-mover advantage provides an adequate head start and technology rapidly becomes obsolete.

As for addressing the trolls, law professor Brian Love has proposed a very sensible solution. Love, a protege of IP godfather Mark Lemley, suggests changing the patent fee structure to create disincentives for hoarding the obsolete patents that trolls typically use to torment their targets. The advantage here is that this is something Obama can do directly. Meanwhile, in Congress, the president can push for legislation to eliminate billion dollar jury verdicts.

Finally, the president can also tap his executive power to increase antitrust scrutiny of giant patent trolls like Intellectual Ventures for imposing what is, essentially, a startup tax across the tech sector. If the Obama administration even attempted to impose such a tax, the political cost would be enormous; there’s no reason the private sector should get away with the same thing.

Enough talk. It’s time to act, Mr. President.

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Tech firms launch new website to fix patent mess

Jeff John Roberts — Wed, 14 Nov 2012 15:05:33 +0000

The U.S. patent system is supposed to foster innovation and reward inventors. But in recent years it has devolved into an epidemic of licensed blackmail with shell companies using flimsy patents to shake down productive companies — especially in the tech sector.

Today, technology firms launched a new website called Patent Progress to call attention to the patent problem, and to share solutions from legal and policy experts. The site is run by the Computer & Communications Industry Association, an advocacy group that counts Google, Microsoft, Yahoo and Facebook among its members. Its contributors include leading intellectual property and antitrust lawyers and scholars.

The significance of the site is that it adds new intellectual heft to a growing patent reform movement in Congress and the courts. Patent Progress also provides plain English explanations of topics like “trolls” and the “Court of Appeals for the Federal Circuit” which have contributed to the patent problem. The site also has a helpful dictionary of terms like prior art and payday mugging (“the phenomenon of small start-up companies being targeted with litigation by patent plaintiffs immediately after receiving venture capital investment.”)

“The goal is to build a narrative towards a bigger picture legislative solution,” said Dan O’Connor, a policy expert and director at the CCIA.

Will all this be enough to stop the patent troll epidemic that, according to a recent academic study, has drained $500 billion from the US economy in the last decade?

In the short term, probably not. The trolls and their lawyers have invested too much in their sprawling legal campaigns (which rely on “inventions’ like emoticon patents) to stop now. And Nathan Myhrvold, the man most responsible for the patent mess, continues to gull media outlets into believing his shakedown campaigns are a force for global good.

But in the bigger picture, the launch of Patent Progress coincides with a growing public awareness, reflected in radio shows like NPR’s “When Patents Attack” and websites like PatentTrolls.org, that there is more to patent policy than romantic images of Thomas Jefferson or Steve Jobs.

(Image by Creativa via Shutterstock)

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Obama says patent trolls “hijack” and “extort;” So do something, Mr. President

Tech firms launch new website to fix patent mess