U.S. Patent Office Moves to Curb Patent Litigation

By | February 21, 2014

The White House announced steps on Thursday designed to reduce frivolous patent lawsuits by trying to make it easier to identify who owns patents and by updating review processes to ensure that fewer weak patents are granted.

Major technology companies such as Google Inc. and Apple Inc. have for years sought protection against companies that typically do not invent anything, but instead buy or license patents from others and then extract licensing fees or file infringement lawsuits.

Companies have said the increase in such litigation stifles innovation and costs billion of dollars in legal fees.

Recently some retailers, coffee shops and other low-tech companies have joined the complaints. Some say that they have been targeted by patent assertion entities, called “patent trolls” by critics, if they, for example, offer free Wi-Fi services to their customers.

Some PAEs have sent multiple patent infringement letters to the same target through different shell companies.

The White House said in a statement that it had responded to the complaints about PAEs with a rule drafted by the United States Patent and Trademark Office that will record who owns what patent and update the record when a patent changes hands.

The USPTO also is creating an online toolkit that a company accused of patent infringement can use to research a firm that has sent a letter demanding patent licensing fees so they can decide how to respond, the White House said.

The White House also said it hopes to knock out bad patent applications by allowing companies or experts to identify, for example, an existing patent similar to the application. Patents cannot be granted if there is no innovation.

Bernard Knight, a former USPTO general counsel, said that some of the proposals seemed unworkable, particularly the database on potential patent litigants. “It’s hard to provide legal advice to people over the Internet,” said Knight, who is now at the law firm McDermott, Will & Emery.

Hal Wegner, of Foley & Lardner LLP, said that the White House priority should be naming a new director for the patent office.

The last permanent director, David Kappos, stepped down early last year. Former Google executive Michelle Lee was named deputy director in December, with responsibility for running the agency until a new chief is named.

In his State of the Union address in January, President Barack Obama urged Congress to pass legislation aimed at reining in patent infringement lawsuits. He had announced a blueprint for the effort last June.

There are a range of bills before Congress on the matter, but two are seen as having the best chance of becoming law.

The U.S. House of Representatives on Dec. 5 approved a bill sponsored by Robert Goodlatte, a Virginia Republican, that encourages judges hearing patent cases to award fees to the winner of an infringement lawsuit. It also requires companies filing infringement lawsuits to detail which patent is infringed – something that does not regularly happen.

That bill would still have to be passed by the Senate, where similar legislation has been introduced by Senator Patrick Leahy, the Democratic chairman of the Judiciary Committee.

Initiatives to adjust the patent system have the support of technology companies including Cisco Systems Inc., Apple Inc., International Business Machines Corp., Google Inc.

The Federal Trade Commission is also studying the problem in what could be a precursor to other legislation. Its study is broadly supported by the National Association of Attorneys General.

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