Obama targets ‘patent trolls’ in bid to protect tech innovation
WASHINGTON -- Taking aim at so-called patent trolls that use the threat of lawsuits to obtain licensing fees, President Obama issued executive orders to crack down on abuses and called on Congress to take tougher steps to protect innovative high-tech businesses.
The moves have been pushed by the high-tech industry, which has complained for years about companies that acquire rights to patents for some of the numerous components in computer software and electronics.
Those firms, which don’t manufacture products, use their sometimes questionable patents as leverage to obtain licensing fees. The companies say they are simply exercising their rights as patent holders.
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Obama has criticized such firms. Asked about them by an entrepreneur during a Google hangout in February, Obama said “they essentially leverage and hijack someone else’s idea and see if they can extort some money out of them.”
White House Press Secretary Jay Carney held up a picture of a troll doll at Tuesday’s news briefing to highlight Obama’s proposals.
“Some people, their detractors, call those firms patent trolls, and so do we, which is why we believe that innovation and not litigation is the way to go when it comes to patent trolls,” Carney said.
The White House said lawsuits by so-called patent assertion entities have more than doubled in the last two years. A 17-page report by White House technology and economic officials released Tuesday cited estimates that such firms threatened more than 100,000 companies with patent infringement suits in 2012.
Among the executive actions Obama announced was a new rule to be enacted by the Patent and Trademark Office requiring patent holders to reveal their ties to other companies. The White House said patent trolls often set up shell companies to hide the extent of their patent portfolios.
Obama also ordered the Patent and Trademark Office to improve its examination process to weed out patents with overly broad claims and to educate consumers, retailers and other technology users on how to handle lawsuit threats.
In addition, the White House called on Congress to take at least seven steps, many already proposed in legislation since Congress approved a sweeping overhaul of the patent system in 2011.
Among those measures is requiring any party sending a demand letter or filing a patent infringement suit to file updated ownership information with the Patent and Trademark Office. Obama wants Congress to provide courts with more discretion to force losers in patent cases to pay the attorney fees for the party that wins.
And he called for legislation to prevent the awarding of overly broad patents
Technology groups raised Obama’s moves.
“Businesses ranging from the smallest start-up to the largest Fortune 500 company are suffering from the enormous waste that the threat of litigation and actual litigation are causing,” said Gary Shapiro, president of the Consumer Electronics Assn.
“Each one of these threats must be taken seriously by a company,” he added. “The cost of fighting these suits comes directly off a company’s bottom line and requires time and resources to be taken away from research and the hiring of Americans.”
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