Patent Reform Rises Again, As Do Arguments About It

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Patent Reform Rises Again, As Do Arguments About It


On Monday, the CEOs of Cisco and J.C. Penney published an opinion piece in the Wall Street Journal (subscription required) under the eye–grabbing title, “Stopping the Economy–Sapping Patent Trolls.” In it, John Chambers and Myron Ullman voiced their support for the reintroduction by Rep. Robert Goodlatte of Virginia of the Innovation Act. As we wrote earlier in the month, the bill would require identification of the patent–owner before an infringement suit could be filed; require greater detail of the infringement theory in the complaint; and make fee–shifting easier if the patent–asserter’s claim lacked a reasonable basis in law and fact. Chambers and Ullman report that their two companies alone spent “more than a third of a billion dollars in the last five years” in defending against cases brought by patent assertion entities (or patent trolls). They also cite data suggesting that more than 60% of patent litigation is filed by patent trolls at a cost to the economy of $29 billion annually.

This statement from two business leaders did not sit well with some members of the patent law community. Professor Dennis Crouch on his Patently–O blog offers a plague–on–both–their–houses defense, arguing that it is not always or only plaintiffs who are to blame, but that “there is a strongly compelling case for arguing that the defendants are to blame for refusing to deal and instead fighting every lawsuit tooth–and–nail.” He further suggests that the lack of out–of–court resolutions of litigation suggests that we have a “systemic problem,” not a patent–assertion problem. On his IP Watchdog blog, Gene Quinn suggests that there is a real question whether Chambers and Ullman are using scare tactics and faulty data to mislead Congress into enacting another round of patent reform. Quinn goes on to say that what he considers to be misleading data “shouldn’t be used to destroy the patent system and tilt patent laws toward infringers and away from innovators.”

Without any pretense of addressing all of the arguments made by any of these disputants, we would say this. First, our experience is that the patent troll problem is not characterized by a lack of out–of–court resolutions of litigation, but rather by too many out–of–court resolutions based not on the viability of infringement claims or invalidity defenses, but on the calculation that it just costs too much to fight. In this regard, Cisco and JCP are the exception, not the rule. Second, we do not see an existential threat to the patent system in the proposals made by the business community and in Congress to address the problem of patent trolls. The patent system is strengthened by measures that make it harder for bad actors to bring abusive claims. Whether the specific proposals of the Innovation Act are the right medicine for the disease is a debate worth having; but the medicine proposed is hardly likely to kill the patient.

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