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President pushes patent reform: showdown over trolls set for spring

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President Obama offered new hope for America’s troubled patent system on Tuesday night, calling on Congress to “pass a patent reform bill that allows our businesses to stay focused on innovation, not costly, needless litigation.”

The plea, set out in a list of priorities recited by Obama in the annual State of the Union address, comes as the House and Senate are hashing out details of the Innovation Act, a law that could fix some of the worst aspects of patent trolling.

The trolling problem, which involves shell companies using old patents to extort everyone from major companies to small app developers, has become especially acute in recent years. Congress tried to fix the situation in 2011 with the “America Invents Act” of 2011 but the law proved to be ineffective.

Obama’s support for the new law in Congress comes as the FTC is investigating prominent patent trolls for anti-trust violations, and as the Supreme Court prepares to hear an important case that could limit or end software patents; in other words, the erosion of the patent system has become so severe that all three branches of government are working to fix it.

All of this doesn’t mean, of course, that reform will happen. Old-guard tech companies IBM(s ibm) and Microsoft(s msft) have already stripped an important provision from the Innovation Act that would have provided a cheap, effective way to challenge bad patents. And the leader of the patent trolls, Intellectual Ventures, is pouring money into Washington to stop reform.

The final version of the Innovation Act is expected to arrive March or April, while the Supreme Court will hear the software case on March 31. In the meantime, recent news stories mean the frustration over the patent system is likely to mount: this week, a patent troll obtained a judgment worth potentially hundreds of millions against Google over old Lycos patents, while the cable industry sued to stop what it calls a troll’s “illegal conspiracy.”

4 Responses to “President pushes patent reform: showdown over trolls set for spring”

  1. Calling IV a patent troll seems to be a stretch. They are a pure research organization which is giving scientists an avenue for making some money. These scientists are not businessmen, they know how to invent things, not how to make money out of it. Unscrupulous corporations, stealing their inventions for free doesn’t seem about right.

    • MM I challenge you to find serious support for this position in the academic and legal community. Whatever small role IV has played in funding science or research, that has clearly been offset by the massive transaction costs that have rolled in as a result of the company’s extortionate patent demands. It’s laughable to say IV is a “pure research organization” — many, many other companies are performing more important research than IV and they’re doing it without trying to impose a roving tax on the rest of the economy. As for “unscrupulous” – I’m not sure there’s anyone more unscrupulous than Lodsys, or many of the 1000’s other shell companies IV has helped to spawn.

  2. @hmurchison, Your suggestions seem quite careless.

    1. Granting software parents only in most extraordinary of circumstances would mean that small software developers would not be able to afford protection against large software giants from stealing their ideas. No equal opportunity. Strangely, Obama’s SOTU address preached equal opportunity, but if you really look at it, equal opportunity was only in areas that benefit his administration, via votes from the public wanting big government to provide for them or via money from big company’s lobby efforts. What about equal protection for the innovators? Nothing. “They don’t benefit the Dems or the GOP, so we don’t care. We just care about the Googles and Microsofts and Apples b/c they give us money, and we say what the people want to hear b/c they give us votes.” Just listen to his speech and look at the votes and look at the lobby dollars. Is perfectly clear.

    2. Ensuring patents are actually being used in products rather than sitting in a portfolio shows an extreme lack of knowledge of what patents are and what they are intended to do. Patents do NOT grant anyone the right to produce anything. You can ask any inventor with a patent if, once granted a patent, he can safely produce what was described in his patent application disclosure without infringing on other patents, and he will tell you absolutely not. Patents do not grant anyone the right to produce anything. Rather, patents grant the right for patent holders to EXCLUDE OTHERS for a temporary period from using your specific invention. This time reserves for inventors a window of opportunity to profit from their grant of exclusivity. Some options for the inventor at this point: a) seek funding from investors with patent in hand (guaranteeing a spot in the market with “Invention X”) and use funding to create product, b) sell or license the patent to those who actually would use the invention in their product(s), or c) do whatever the inventor sees fit with their granted IP.

    The patent system is in perfect order as it stands right now. What is happening is that people like Jeff Roberts are spreading fear that patents are bad, and those who protect their rights when someone infringes on them (aka, “patent trolling”) is worse. But this very patent assertion is what keeps the big companies from stealing ideas and creating a market with unfair competition.

    What is happening under our very eyes is our government getting bigger and bigger and is being run by corporations, who are now making Obama (and also the GOP ) his bitch and getting whatever they want by throwing lobby budgets at the feet of DC. And what will ultimately happen, if this trend continues, is that Google and their robots will take over the world, replacing humans who want to create and work, and only the richest will survive.

  3. One step in the right direction would be:

    1. Granting software patents only in the most extraordinary of circumstances.

    2. Ensuring patents are actually being used in products rather than sitting in a portfolio.