Discouraging “Patent Trolls”

The US Senate is considering an amendment that would require the loser of a patent lawsuit to cover the winner’s legal costs. The intention is to discourage long, drawn-out, and baseless lawsuits filed by so-called “patent trolls.” “The troll must go,” said California Senator Dianne Feinstein. Patent trolls, or patent assertion entities (PAEs), purchase patents solely in order to demand licensing fees from as many companies and individuals as they can, helped by the threat of legal action. The typical PAE purchases patents then sends out thousands of letters to companies accusing them of infringement, demanding fees, and warning of a lawsuit if they pay up. The PAE business model is comparable to email spam: send out enough threatening letters demanding payment, and some will come back with checks attached. The House passed the amendment, which has the favor of major technology companies like Google and Apple, and the Senate is likely to follow suit.

The new law would do nothing to discourage ridiculous patents on simple technology, which are the basis of major technology companies’ success in many cases. For example, Amazon holds a patent on “one-click shopping.” Any company with an application that offers users a “one-click” online checkout must pay Amazon licensing fees. Is Amazon to be considered an innovator, or a patent troll? Apple Inc., if you can believe it, holds a design patent on round-cornered rectangles for display devices, including tablets, smartphones, and so on. Apple even patented its “slide-to-unlock” functionality; the High Court of London ruled in Apple vs. HTC that the latter company had not infringed because Apple’s patent was “obvious.” The German Federal Patent Court ruled to invalidate all of Apple’s slide-to-unlock patents in that country because they lacked “technical innovation.”

The time of patent reform is nigh. The only way to end frivolous patent lawsuits is to stop issuing ridiculous patents. The proposed legislation would protect technology companies like Apple and Google, making it easier for them to sue rivals and startups for infringement on obvious and absurd patents, and do nothing to increase the standards of new patents. What will the next cutting-edge Apple patent be? Round circles?

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