It appears that today U.S. Representative Bob Goodlatte of Virginia introduced a piece of legislation to broad bi-partisan support which is aimed squarely at cutting down on the number of frivolous and abusive patent suits which are roiling the technology industry.
The proposed legislation would institute a “loser pays” system for attorneys’ fee awards, would delay burdensome discovery requests until the court has first interpreted the disputed patent, and would increase transparency of patent ownership (curtailing patent troll’s favored M.O. of using multiple shell companies to hide behind and/or use a fronts in patent litigation).
This proposed litigation, while not necessarily a panacea for the the intelelctual property problems currently facing companies in the technology industry, would certainly go a long way to curb some of the more egregious and abusive tactics currently being utilized by non-practicing entities (a/k/a patent trolls).
It will be interesting to see if this bill will actually be passed into law. Here’s to hoping!
It appears that Martha is ready to throw down with notorious patent troll Lodsys. Martha Stewart Living Omnimedia has filed for declaratory judgment against the troll, seeking a ruling which not only finds MSLO’s electronic magazines to not infringe upon Lodsys’ patents, but that the patents themselves are invalid.
On hearing about this, I immediately thought of the line from the cult classic film “The Princess Bride”, in which the villain declares: “You just made the second classic blunder! This first, of course, is never become involved in a land war in Asia. But only slightly less well know: ‘Never go head to head with [Martha Stewart]…’ “
Patent troll king Intellectual Ventures is notorious not only for its size but also for the invisible way it stalks its victims. That could change, however, thanks to a crowd-sourced project that will identify the shell companies that IV uses as tentacles.
For the unfamiliar, IV is the dark empire of Nathan Myhrvold, a former Microsoft (s msft) executive who gamed the patent system by amassing tens of thousands of often-flimsy patents and then threatening to sue everyone in sight. IV and other trolls have reportedly drained $500 billion from the economy and created widespread disenchantment with America’s patent policies.
While IV has been at this for years, its activities are often undetected thanks to a clever use of a reported 1,300 shell companies. This means that the start-ups and tech companies who receive “pay-up-or-else” letters for using things like emoticons are confronted by patent owners with futuristic names…
This is an interesting opinion piece by Twitter’s Ben Lee. I absolutely agree with his proposition that US IP enforcement laws should include a cost shifting mechanism (i.e. loser pays winner’s attorneys’ fees) where the litigation is found to be frivolous. Frivolous litigation clearly is an unwanted economic drain. Unfortunately, however, such cost shifting mechanisms do not address the issues created by NPEs (i.e. patent trolls) who amass intellectual property portfolios in order to become virtual gatekeepers on the road of technological advancement. That is an issue which will require a much more subtle, nuanced approach, balancing the benefits of rewarding innovation while preventing the financial road-blocking of further innovation.
Twitter is an engineering company, and engineers like to innovate. Twitter is also well known, and, as a result, we receive patent threats and lawsuits from time to time. Many of these are baseless, and our policy is to fight them with all our might. In fact, we have never agreed to pay to settle a patent suit.
Still, even meritless lawsuits cost us money in attorney fees, and force our engineers to spend time with lawyers rather than improving our product. For example, we recently won a case regarding U.S. Patent No. 6,408,309, entitled “Method and System for Creating an Interactive Virtual Community of Famous People.” After a trial before a jury, we managed to prove that we didn’t infringe and that the asserted claims from the patent were invalid. This patent was “invented” by a patent lawyer, Dinesh Agarwal. According to his own testimony at trial, Mr. Agarwal…
Joining the growing chorus of judicial discontent, Federal Circuit Judge Timothy Dyk laid into a lower in the Mayer v. Bodum patent case, labeling the case “an example of what is wrong with our patent system.”
Increasingly judges ruling on patent cases are finding protracted and ruinously expensive patent litigation to be wasteful and contrary to both the interests of the inventorship community and the underlying purpose of the patent system.
In the Bodum case, Dyk was particularly frustrated with not only the incredible expense of the litigation but with the fact that underlying patent had been able to survive a challenge on the basis of obviousness up until that point where the case reached him.
While the protection of intellectual property is undoubtedly of significant economic value to our company, the growing proliferation of patents which fun afoul of being clearly obvious (and thus invalid and, in fact, not eligible for patent in the first place) is a growing burden on our innovation economy. While there are numerous flaws in our current patent system, one of the most detrimental is the apparent inability to reliably and consistently weed out properly patentable IP from IP that is not properly patentable (whether for obviousness or other reasons). If we are to continue to grow our economy on the backs of innovation and technological advancement, these are the types of roadblocks that we must remove!
A recent study, published by James Bessen and Micahel Meurer of the Boston University School of Law examines the direct costs of patent litigation by “non-practicing entities” (NPEs), more commonly known as “patent trolls”. Their assessment is that the direct costs of patent litigation initiated by NPEs in the U.S. rose from $6.6B in 2005 (encompassing 1,401 claims) to $29B in 2011 (encompassing 5,842 claims). Earlier research from the same authors found that the the annual wealth lost by publicly traded companies in the U.S. was a staggering $80B in 2011.
The authors identify increasing patent litigation as “a significant tax on investment in innovation,” with the the direct result of organizations having less money to invest in their research with increasing resources being bled off into legal defense.
Bessen and Meurer reject the notion put forward by IP rights firms that asserting patents plays a socially valuable role in enabling inventors to realise greater profits from their innovations. Rather, the authors assert that patent lawsuits are a social loss and not a transfer of wealth as rights holders assert.