The patent troll problem cannot be dismissed as a myth


In 2011, Congress passed the America Invents Act and took strong steps against a prolonged wave of abusive patent litigation.  That legislation arose because by the early 2000s, patent troll litigation spiraled out of control, increasing 6-fold over the rate in the 1980s, and affecting almost 5,000 unique defendants each year.  Researchers found that “patent trolls cost defendant firms $29 billion per year in direct out-of-pocket costs; in aggregate, patent litigation destroyed over $60 billion in firm wealth each year.” These losses were caused in part by abusive litigations practices, but mainly by poor-quality patents passed by the PTO. 

Thanks to the AIA and certain court decisions, the patent troll problem has diminished

The AIA allowed parties to petition the PTO to take a second look at patents that were reasonably likely to have been mistakenly issued.  That second look occurs through an inter partes review process allowing a challenge to patent validity on the limited grounds of novelty and nonobvious subject matter.  The Patent Trial and Appeal Board reviews these patents administratively, without the expense of full-blown federal litigation. 

In addition, the Supreme Court’s decision in Alice clarified the meaning of unpatentable subject matter, prohibiting patent claims for merely doing things like arbitrage or meal planning “on a computer.”   The new standard says that if an inventor proposes to use a computer or an app or a website to implement an abstract idea and nothing more, it’s still an unpatentable abstract idea.  The AIA and Alice are a one-two punch: the review procedures were important to clear out old bad patents, the new Supreme Court standard promised to dry up the flood of bad quality patents that had fueled the patent troll litigation binge. 

The poor-quality patents issued by the patent office are still in the wild, and the practices of trolls still remain a problem. For several years, the PTO vigorously implemented these new procedures and successfully weeded out low-quality patents that never should have been granted.  Patent trolls got the message and began to shift away from the bigger companies who could use these new review procedures. 

But these abusive practices are a long way from gone

In 2018, trolls have accounted for more than 80 percent of all patent suits involving small and medium-sized companies.  If  you think patent trolls have gone away, talk to David Selzer of Azure Farms in Oregon.  He farms 2000 acres and sells his produce through a website. He’s in court for ignoring what seemed like a nuisance letter from a company he never heard accusing his website of infringing an obscure 2001 patent that would appear to apply to every website in the world. He has no money to hire an expensive lawyer to defend himself and so the patent troll simply assumed he would settle.

For Mr. Selzer, the bald assertion in a recent speech by Andrei Iancu, the head of the U.S. Patent and Trademark Office, that the troll problem is “imaginary” must be surprising.  His further comments that safeguards are no longer needed is disappointing, ill-advised and uncomfortably at odds with reality. His comments were uniformly hostile to the PTAB processes mandated by Congress, saying that they have “over-corrected and risk throwing out the baby with the bathwater.” He urged those who continue to suffer from patent troll abuses to stop “scaring inventors, entrepreneurs and government officials” with their “fairy-tales” of abuse. He urged those who want to continue to use Congressionally-mandated patent review processes to “stop attacking” the patent system.



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