“Patent trolls,” more diplomatically referred to as “patent aggregators,” “patent assertion companies,” or “non-practicing entities,” have become an increasingly problematic issue for software designers over the past decade.
On February 25, the Vanderbilt Intellectual Property Association hosted Hyatt Fund event that addressed this issue, “Software Skrimishes: Is Patent Stockpiling Trampling Innovation?” Aggregators acquire or file software patents and then “assert” them for the sole purpose of generating revenue. The threat of a costly lawsuit can have a chilling effect on businesses started by entrepreneurs who lack the financial or legal resources to fight a patent infringement lawsuit. President Obama recently called for patent reform, citing concerns that “patent trolls” are stifling innovation in the software industry, in which entrepreneurial start-ups provide “an important development engine” for the nation.
Professor Sean Seymore, whose research focuses on patent law, moderated a panel that included Colleen Chien, a patent law and policy expert who is an assistant professor of law at University of California, Santa Clara; Timothy Holbrook, associate dean at Emory Law School, whose work addresses patent litigation and international patent law; and Julie Samuels, a 2005 Vanderbilt Law graduate who is a staff attorney and holds the Mark Cuban Chair to Eliminate Stupid Patents at Electronic Frontier Foundation, a non-profit organization that advocates for free speech, privacy, innovation and consumer rights in the digital world. The panel was introduced by Zac Loney, vice president of the Vanderbilt Intellectual Property Association.
A major issue related to the rise of “patent assertion” companies, according to Samuels, is that technological advancements in software development has outstripped the ability of the U.S. Patent Office to determine when a patent should be granted. “Software patents are a fairly new construct, and the way the technology works is different from most other technologies, so there’s a lot of disconnect and instability,” she said. “What you have is a culture of wanting to get as many software patents as you can. There are a lot of bad patents out there now, and there’s no way to know whose hands they’re going to end up in. Some software patents are so broad and so vague, the system doesn’t really work—in fact, it incentivizes the non-practicing entities.”
Chien views the Leahy-Smith America Invents Act signed into law in September 2011 as a step in the right direction, in part because it gives the public a greater right to “chime in” on questionable patents. “Every time there’s a new big pie, people are trying to fight for a piece of it,” she said. “What’s different about this era is the advent of a non-practicing entity that owns patents. Public companies are now founded on monetization strategies.”
Holbrook noted that the new business model of patent aggregation is now pervasive, extending far beyond software patents. “Patent monetization is becoming the norm for all markets,” he said.
The panelists offered no immediate solutions to balance the need to foster innovation with the legal right to defend patents. However, Samuels touted a bill sponsored by two congressmen, known as the SHIELD (Saving High-Tech Innovators from Egregious Legal Disputes) Act, which would require companies and law firms engaging in patent assertion suits to pay the court costs of companies and individuals they sue if they lose because their patent is invalid or there was no infringement. “It’s really easy to be a troll,” Samuels said. “The business model is really easy, and it’s really hard to fight back. We need to make it harder to be a troll!”