The Search for “Balanced” Patent Reform

The universities and the Innovation Alliance, despite being given nearly everything they’ve asked for, are still calling for “balanced” patent reform. They just sent a letter threatening to oppose any patent reform bill unless, “the provisions on discovery, customer stay, fee shifting and any associated measures, pleadings, and enforcement by the Federal Trade Commission … achieve the appropriate balance.”

Are you kidding me?

Let’s look at some of the changes that have already been made in the interests of “balance”:

• every provision intended to address patent quality was dropped;
• the fee-shifting provision was weakened, and exceptions were added;
• the customer stay provision was weakened;
• exceptions were added to the heightened pleading requirements;
• exceptions were added to the provisions to streamline discovery; and
• the standard for claim constructionSee Markman hearing in inter partes reviewAn adversarial procedure created by the AIA for challenging patents. Intended to be similar to a court proceeding, the parties argue before an Administrative Patent Judge, not a patent examiner. The challenger must show a reasonable likelihood of successfully invalidating one claim before the PTAB will agree to grant a petition for review. and post-grant reviewA procedure by which a third-party may contest issuance of a patent at the USPTO within a short period (9 months) after issuance.  Introduced to the U.S. by the AIA. The EPO has a similar procedure. is being changed to make it more difficult to invalidate bad patents.

Let’s get real here. The universities and the Innovation Alliance are like Lucy playing the football gag on Charlie Brown. They’re simply not going to support any kind of reform that has the slightest chance of costing them money.

Let’s focus on correcting the worst new imbalance, namely the exploding ratio of patent trollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary.  Cf. NPE, PAE, PME.  See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms. suits to all patent suits.

In 2005, there were just over 2700 patent cases filed in total in the United States. In 2012, there were over 2700 patent cases filed by patent trolls in the United States. (See Figure 1 of Cotropia et al.)

That’s right. Patent trolls now file as many lawsuits as the combination of all companies in all industries did less than a decade ago.

That’s a patent system that is already out of balance, and it’s why we need the Senate to pass meaningful patent reform now.