Patent trolls have become an increasing problem for the US patent system. President Obama is now seeking to take action against them.
Trolls are organisations which buy up un-used and unexploited patent rights and seek to raise revenue by enforcing them against third parties.
Trolls are particularly active in the US, where features of the US legal system can be used to give the patent holder a strategic advantage over the defendant in patent litigation. These features include, a jury system for the first instance hearing, high costs of patent litigation in the US, and the risk of large awards of damages to the patent holder. When patent trolls threaten infringement proceedings, irrespective of the real merits of the case, many threatened companies often elect to negotiate and pay a licence fee, rather than spend money fighting a patent action.
The use of International Trade Commission (ITC) proceedings for patent actions has also been exploited by Trolls since these can lead to wide-ranging injunctions being granted to the holders of patents much more quickly than through conventional infringement proceedings in the courts.
Last week, President Obama took aim at the patent trolls, and announced plans to crack down on the ability of patent trolls to enforce their rights against companies which have real technology businesses.
Among the proposals are the following:
- A requirement for the owners who stand to benefit from patent infringement to be identified when threatening letters and law suits are filed;
- Allowing lower courts to make costs awards in an attempt to dissuade so-called nuisance filings;
- Providing some form of protection to end users from litigation if they use a product accused of patent infringement. This could be something similar to the ‘threats’ provisions we have in the United Kingdom;
- Improving standards in ITC proceedings, including “qualified” judges in the relevant area of law; and
- Requiring demand letters in which patent owners seek money to be put into a publicly searchable database.
More background discussion can be found on the White House blog.
Whether all these provisions will end up being brought into force remains to be seen. However, it is encouraging to see efforts being made to address issues in the US patent litigation system which many feel are weighted too heavily in favour of Patentees.
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking before any action in reliance on it.