For the last 1 ½ years, we have heard about proposed U.S. legislation that is aimed at discouraging baseless patent troll lawsuits. Yet, nothing has been signed into law. We’ve also seen various state Attorney Generals’ offices take action, panels of federal judges urging steps to heighten the pleading requirements for such suits and even FTC commissioners weighing in on the issue.
Yesterday, the Obama Administration announced various initiatives designed to improve patent quality and “combat patent trolls.” They have been touted as a renewal of President Obama’s call for patent reform from his State of the Union address. The White House highlighted five current initiatives ranging from “promoting transparency” (e.g., updating ownership information during USPTO proceedings) to “making patents clear” (e.g., helping USPTO examiners more effectively examine so-called “functional claims” to ensure that patent claims are clear). The White House further announced three new initiatives that are allegedly designed to “strengthen the quality and accessibility of the patent system.”
While providing more resources to USPTO examiners is always welcomed, it is doubtful that any of these initiatives will have any impact on curbing troll activity. The real power in troll cases comes from the fact that cases can be brought on very thin allegations of infringement and it is not commonplace for defendants to recoup their attorneys’ fees for defending against such actions. There is not a uniform set of rules that apply to all patent infringement cases in federal court and as such, plaintiffs can try to game the system by bringing cases in jurisdictions that are either unfamiliar with complex patent litigation or have no rules governing such cases or both. The end result is that defendants can be faced with having to pay hundreds of thousands of dollars in needless discovery (primarily related to electronic information, such as e-mail, and archived data, etc.) right out of the starting gate in those jurisdictions that do not have a phased approach to patent litigation. Even if the Federal Rules of Civil Procedure are amended to required more detailed patent litigation claims, patent troll activity may not necessarily decrease as crafty counsel will figure out language to meet the bare minimum that is required. What would have an impact is legislation that awards attorneys’ fees to the prevailing party (much like in the copyright context- 17 U.S.C. § 505). This would provide the ultimate disincentive to bring frivolous cases. It will be interesting to see if any meaningful measures are actually implemented in the near future as many people seem to think that there is a problem with the current system.