US President Barack Obama introduces his three judicial nominees for the US Court of Appeals for the District of Columbia Circuit, in the Rose Garden of the White House in Washington, DC, yesterday.
WASHINGTON: The White House yesterday moved to crack down on companies that make money by suing other firms over patents, especially in the tech sector, rather than actually providing goods or services.
These so-called patent trolls, which take other companies to court with an eye to collecting licence or royalty fees, are seen as stifling innovation. The US government has been under pressure to stem such abusive litigation.
The White House said President Barack Obama issued five executive orders and called for new legislation to update a reform enacted in 2011.
“Innovators continue to face challenges from patent assertion entities (PAEs), companies that, in the president’s words ‘don’t actually produce anything themselves,’ and instead develop a business model ‘to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them,’” a White House statement said.
The White House said new action is needed in the face of a flood of recent patent litigation, particularly in the smartphone sector, and because “several major companies spend more on patent litigation and defensive acquisition than on research and development.”
One of the signed orders calls for patent holders to have by default a “real party-in-interest” in a patent.
This is aimed at creating more transparency, and disclosing the true owners of patents, to prevent the use of secretive “shell companies” holding patents.
The president also signed measures aimed at ensuring “overall patent quality” to reduce the number of vague or broad patents which can be used to sue inventors.
The move drew praise from TechAmerica, a major US technology lobby group.
The White House action will help in “reigning in abusive patent litigation,” said TechAmerica’s Kevin Richards.
“Protecting innovators intellectual property is a key component to maintaining the competitive advantage the United States has over the world,” Richards said.
A number of activist groups have been pressing for action to curb patent trolls and stem a flood of patent litigation against tech firms.
The Electronic Frontier Foundation has argued that the patent system is “broken” and that “patent trolls buy too many of these patents and then misuse the patent system to shake down companies big and small.”
But Robert Stoll, a Washington patent lawyer who was formerly commissioner for patents at the US Patent and Trademark Office, urged a more cautious approach.
“The people who say the patent system is broken have another agenda,” Stoll said. “The patent system is probably the best in the world, it is functioning. There could be some tweaks.”
Stoll said even the definition of patent troll is vague, because some holders including researchers or universities may legitimately want to hold the patents without manufacturing or selling anything.
Stoll said efforts to improve transparency are good, but noted that in view of the 2011 law enacted, “I think we need time for some of that to work.”
Meanwhile, Obama yesterday named three judges to serve on an influential federal appeals court in Washington and urged the Senate to set aside politics and move quickly to hold confirmation votes.
The president announced that he was nominating Patricia Ann Millett, Cornelia Pillard and Robert Wilkins to fill three vacancies on the 11-seat US Court of Appeals for the District of Columbia Circuit.
Millett is a Washington lawyer who regularly argues before the US Supreme Court, Pillard is a professor at the Georgetown University Law Center and Wilkins is a judge on the US District Court for the District of Columbia.
The federal appeals court rules frequently on major regulatory and other high-profile issues and is sometimes seen as a springboard to serving on the US Supreme Court.AFP/Reuters
