President Obama issued executive orders Tuesday in an attempt to stop firms that abuse patents, or so-called patent trolls. The issue is one that’s been championed by the technology industry, according to the press, making it an interesting business angle.
Here are some of the details from the Los Angeles Times story:
Taking aim at so-called patent trolls that use the threat of lawsuits to obtain licensing fees, President Obama issued executive orders to crack down on abuses and called on Congress to take tougher steps to protect innovative high-tech businesses.
The moves have been pushed by the high-tech industry, which has complained for years about companies that acquire rights to patents for some of the numerous components in computer software and electronics.
Those firms, which don’t manufacture products, use their sometimes questionable patents as leverage to obtain licensing fees. The companies say they are simply exercising their rights as patent holders.
Obama has criticized such firms. Asked about them by an entrepreneur during a Google hangout in February, Obama said “they essentially leverage and hijack someone else’s idea and see if they can extort some money out of them.”
The New York Times offered these details of the president’s orders:
The administration ordered the Patent Office to begin writing rules requiring patent applicants and owners to make clear who owns the companies – which are often little more than legal shells – that file for patents or that assert patent-infringement claims.
The administration also instructed the Patent Office to tighten scrutiny of overly broad patent claims and said it would aim to curb patent-infringement lawsuits against consumers and small business owners who are simply using off-the-shelf technology.
In 2011, Congress passed and the president signed legislation updating the patent system, but it quickly became clear that the effort failed to address what has become the country’s leading patent problem: legal battles initiated by patent-assertion entities, also known as patent trolls, that have no material business other than filing patent infringement claims.
“What we need to do is to pull together additional stakeholders and see if we can build some additional consensus on smarter patent laws,” Mr. Obama said in February and repeated Tuesday.
The White House also recommended seven ways that Congress could address the issue through new legislation, including better disclosure, more discretion for courts to assess sanctions for abusive court filings and stronger International Trade Commission patent-enforcement standards.
Interestingly, the Wall Street Journal story had a small response from the firms high up in its story:
The Obama administration’s actions are intended to target firms that have forced technology companies, financial institutions and others into costly litigation to protect their products. These patent-holding firms amass portfolios of patents and focus on pursuing licensing fees rather than using the patents to build new products.
The firms say they are doing nothing wrong, just defending patents that were legally granted by the U.S. Patent and Trademark Office. They say they promote a fair market by protecting smaller inventors.
Reuters offered some excellent context about what the suit means for technology firms and why the administration is tackling the issue:
Cisco Systems Inc, Apple Inc, Google Inc and other big technology companies have been pushing for legislation that would reduce the number of times each year that they are sued for infringement.
Among other steps, the White House called on Congress to pass legislation to make it easier for a federal judge to award legal fees to the winner of a patent case if the judge deems the lawsuit abusive.
It also asked lawmakers to take up the issue of companies going to the U.S. International Trade Commission to request sales bans for products made with technology that infringes upon an existing patent because that panel’s standard for ordering such an injunction is lower than a U.S. district court’s.
The disparity has led to a tidal wave of patent infringement complaints filed at the ITC.
Obama also asked lawmakers to require companies that sue for infringement to have updated ownership information on file with the U.S. Patent and Trademark Office. He urged the patent office to write a similar regulation.
Obama’s actions were aimed at improving incentives for high-tech innovation, a major driver of economic growth, the White House said in a statement.
“Stopping this drain on the American economy will require swift legislative action, and we are encouraged by the attention the issue is receiving in recent weeks,” White House spokesman Jay Carney said in a statement.
What was most interesting about the coverage Tuesday was that I had to read just about every news outlet to make sure I understand exactly what was at stake and who was advocating for it. All the stories took slightly different angles and focused on slightly different parts of the statement. This is obviously a complex problem, but no one wrote the definitive story on the news.
