Patent Reform Stirs Debate
2015 PATENT REFORMS
Four major patent reform efforts are pending before congress and each issue is raising concern from both patent holders and patent seekers. Many individuals think the current patent process hurts innovation because it can take several years before a patent is awarded. By that time, the technology is way beyond that point and companies with deep pockets can use patents as a weapon.
Scott Converse, Former Employee for Motorola
Scott Converse is a former software developer for Motorola Inc. He says, “We were developing WiMax, which eventually became 4G. We were told we were going to a meeting with three patent attorneys later that month. What we did was sit around and think up new stuff we could patent. Over a three-day period, we came up with almost 200 new patentable ideas. The lawyers applied for all of them and were awarded about 120 patents. That’s why Motorola was once the world champion at filing patents each year”. Converse believes these patents were used as a weapon and a negotiation tool, to shut down potential competitors with lawsuits.
One issue in the patent world is known as trolling. An established business purchases patents in technical industries. They file lawsuits demanding licensing fees from start-up technology companies, particularly around the time of an IPO.
One specific case concerns Life360, a Silicon Valley company that developed a mobile application designed to keep families connected. They raised $50 million in investment and shortly after, received a letter saying they had three days to pay a licensing fee to a company they weren’t familiar with. A 76 year old man had filed patents decades ago and believed he had a case. After $1.5 million in legal fees, a jury sided with Life360.
FOUR NEW LAWS
The Innovation Act
This legislation passed the house in 2013, but failed the senate. Senator Patrick Leahy, Chairman of the Senate Judiciary Committee, announced he was “taking the patent bill off the agenda” due to a failure of the House and Senate to “combat the scourge of patent trolls on our economy without burdening the companies and universities who rely on the patent system every day”. The bill was reintroduced in 2015.
This act provides that the loser of patent infringement litigation would have to pay the attorney’s fees of the winner, unless the loser’s positions are found to have been objectively reasonable.
This legislation addresses the sending of bad faith patent demand letters, stating such behavior may violate the FTC Act. The act defines bad faith as making a false or misleading statement or omission with reckless indifference to the truth. The act authorizes the FTC and state attorneys to bring action to stop abusive behavior.
Innovation Protection Act
The bill seeks to provide permanent funding for the U.S. Patent and Trademark Office. The fees collected by the USPTO would remain available until expended. Appropriators have been unwilling to allow the USTPO to keep user fees. An estimated $1 billion has been diverted since 1992 according to the Intellectual Property Owners Association.
STRONG Patents Act
This Act would change a variety of administrative proceedings that occur after a patent has been granted. These include allowing the Patent Trial and Appeal Board (PTAB) to abandon the broadest reasonable interpretation standard (BRI) and mandating claims be presumed valid, which would place the burden of proof on the patent challenger. Some groups are opposed to this because it would not allow public interest groups to challenge a poor patent. The act would also eliminate fee diversion, allowing the USTPO to spend all the fees it collects, without regard to its fiscal year limitations, make it easier for courts to award willful damages, and give the FTC the greater ability to go after people with misleading demand letters.
Lawmakers, patent attorneys, established Silicon Valley Tech companies and innovative young start ups have differing views on the patent process, but all rely on the process to encourage and protect innovation.
Mollborn Patents | Patent Protection Made Easy
Obtaining a patent is a long, confusing process and it helps to have someone experienced in the technology you are patenting, in addition to being experienced in the patent process. Fredrik Mollborn has been helping companies protect their intellectual assets since 1997 in the U.S. and abroad. If you are looking to secure your intellectual property, reach out to Mollborn Patents for a consultation.