After seeing the Obama Administration’s June 4 announcement on its plan to combat non-practicing entities (NPEs), a.k.a. patent trolls, and reading commentary on the President’s actions and recommendations, I’m having a hard time understanding why anyone in the patent community sees this as real progress toward a viable solution.
The Administration is going about this all wrong. In typical Washington fashion, they’re not addressing the real problem.
The administration wants to outmaneuver NPEs by improving patent quality as well as the quality of our enforcement agencies. It also seeks to punish trolls by allowing judges to award attorney’s fees in patent litigation where the plaintiff loses at trial.
But will that really stop patent trolls from suing companies and startups?
My answer is no.
The Administration is working off of a presumption that trolls thrive because of bad patents, in particular bad software patents. The assumption is that overbroad ill-defined patents allow trolls to go after multiple defendants even ones that the patent isn’t meant to cover. Why doesn the Federal Government care? If money is spent on patent litigation, it isn’t being spent on R&D thus weakening our economy.
Touting his solutions, the President is basically saying: “Ha ha, NPEs! We’ll make better patents so you can’t enforce crappy patents anymore. And if you try to enforce crappy patents, you’ll have to pay up. What do you have to say about that patent trolls?”
Well if I’m a patent troll, here’s what I would say. “Thanks! I’ll take the risk of punishment and enforce those better patents.”
Don’t get me wrong. I think improving patent and enforcement quality should be a top priority. It makes the entire system better, but I just don’t see how it specifically helps companies sued by NPEs. It’s not like they can’t enforce better patents too.
(And just as an aside, better patents mean better ammunition for these well-funded litigation machines. Better patents means their harder to invalidate, right?)
The real problem goes so much deeper than patent quality and punishment.
In my opinion, the real issue is the cost defendants must pay to defend themselves against patent infringement claims.
Patent litigation is one of the most expensive types of litigation a company can engage in, costing both parties millions of dollars if the case goes to trial. Most companies, let alone startups, don’t have this type of money.
If you can’t afford to defend yourself, you will settle the case or stop the alleged infringing activity before a judge or jury can find a patent invalid or a judge can award attorney’s fees.
It doesn’t matter if the patent is good, bad, or ugly, or what powers the judge is given, if the case never goes to trial.
If Google and the other Silicon Valley technology giants really think trolls are a problem, then they need to start a fund to help startups pay for patent litigation defense. Or better yet, stop settling these cases and use their resources to defend themselves in court.
It’s the only way the Administration’s recommendations are going to work.
Silicon Valley must stop paying Washington to solve their problems because the only solutions the President and Congress can come up with won’t work without companies challenging the NPEs in court, which means paying a lot of money to defend themselves.
NPEs aren’t banking on bad patents. They’re banking on the fact that defendants won’t be able to mount a defense. If defendants can’t defend, patents can’t be found invalid and judges can’t award attorney’s fees.
It’s about money.
It’s as simple as that.