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Patent Trolls in the White House!
Tangible IP, LLC

PATENT TROLLS IN THE WHITE HOUSE!

The recent White House issuance of five executive actions and seven legislative recommendations to address the current patent assertion landscape is described in such terms as President Obama Wallops the Patent Trolls and Taking on Patent Trolls to Protect American Innovation. Couched in such terms, one might conclude that the White House’s move will have significant impact on abuses of the patent system or save American innovation. The executive actions and legislative proposals may improve the overall operation and quality of the patent system. Yet, the effect of the White House efforts is possibly less drastic than many media headlines would suggest. Despite targeting “patent trolls,” any impact would affect all patent holders and consumers similarly.
A simple way to understand the White House executive actions and legislative proposals is to look at their overall aim. The underlying goals appear to be: Transparency, Leveling the Stakes Between Patent Assertion Entities and Their Targets, Resolving Ambiguity and Increasing Scrutiny of Software Related Inventions, Improving Patent Enforcement. Note that the White House may have split the difference between different sides of the patent debate. While the first 3 categories appear to weaken so called abuses of the patent system, category 4 seems to strengthen patent enforcement. Hence, if patent holders can overcome any hurdles presented by the first 3 categories, they’ll benefit from category 4. As they say, what doesn’t kill a patent may make it stronger.


LEGISLATIVE RECOMMENDATIONS
Transparency
  • Legislative Recommendation- Require patentees and applicants to disclose the “Real Party-in-Interest.” This is aimed at NPEs who have traditionally used ghost shell companies to go after infringers.
  • Use demand letter transparency to help curb abusive suits (such as publishing demand letters).
Leveling the Stakes Between Patent Assertion Entities and Their Targets
  • Permit more discretion in awarding fees to prevailing parties in patent cases,
  • Protect off-the-shelf use by consumers and businesses (against patent assertion).
Resolving Ambiguity and Increasing Scrutiny of Software Related Inventions
  • Expand the PTO’s [AIA] transitional program for covered business method patents (to include a broader category of computer-enabled patents)
Improving Patent Enforcement
  • Change the ITC standard for obtaining an injunction (to align with federal court standard of eBay Inc. v. MercExchange). This would remove some of the threat of having one’s goods immobilized at customs, which is tantamount to an injunction when products (such as Apple’s iPhones) are imported from Asia.
  • Ensure the ITC has adequate flexibility in hiring (qualified Administrative Law Judges).
EXECUTIVE ACTIONS
Transparency
  • Making “Real Party-in-Interest” the New Default.  
  • Expanding Dedicated Outreach and Study.  
Leveling the Stakes Between Patent Assertion Entities and Their Targets
  • Empowering Downstream Users (about rights against patent assertion).  
Resolving Ambiguity and Increasing Scrutiny of Software Related Inventions
  • Tightening Functional Claiming (particularly in the area of software).  
Improving Patent Enforcement
  • Strengthen Enforcement Process of Exclusion Orders (at the ITC). 
 
Overall, the White House executive actions and legislative proposals may be beneficial for the patent market because they target underlying problems in the patent landscape in a systematic manner. Although “patent trolls are the purported linchpin for the move, none of the actions nor proposed legislative ideas target patent trolls per se by singling them out from other kinds of patent holders. The White House described “patent trolls” as non-practicing entities that “hijack” the patent system. By moving forward on ambiguous definitions, there was little basis on which to tailor measures against non-practicing entities. The White House could have released the executive actions and legislative proposals by framing the issues as addressing the overall patent market.
Ultimately, there is so much  the White House can do as it knows full well that it is constrained by the fundamental property title conferred to the patent owner, whereas or not it doubles as the inventor.

Louis Carbonneau, Founder & CEO
Louis Carbonneau, Founder & CEO
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