Thursday, April 28, 2016

The journal Science does "The growing problem of patent trolling" in April 29, 2016 issue

Back in the year 2014, IPBiz discussed some work by Lauren Cohen on "patent trolls" [see
Lauren Cohen et al. go after "patent trolls" ].

Flash forward to 2016, and Cohen is talking about patent trolling in the journal Science. The summary states

The last decade has seen a sharp rise in patent litigation in the United States; 2015 has one of the highest patent lawsuit counts on record (1). In theory, this could reflect growth in commercialization of technology and innovation—lawsuits increase as more firms turn to intellectual property (IP) protection to safeguard their competitive advantages. However, the majority of recent patent litigation is driven by nonpracticing entities (NPEs), firms that generate no products but amass patent portfolios for the sake of “enforcing” IP rights (2). We discuss new, large-sample evidence adding to a growing literature (3–7) that suggests that NPEs—in particular, large patent aggregators—on average, act as “patent trolls,” suing cash-rich firms seemingly irrespective of actual patent infringement. This has a negative impact on innovation activity at targeted firms. These results suggest a need to change U.S. IP policy, particularly to screen out trolling early in the litigation process.

Science 29 Apr 2016:
Vol. 352, Issue 6285, pp. 521-522
DOI: 10.1126/science.aad2686

The site previews the paper by Cohen (with Umit Gurun and Scott Duke Kominers ) about to appear in the journal Science. See New study exposes growing problem of patent aggregators and negative impact on innovation .

Within the piece, one has the text

H.R. 9, the "Innovation Act," which is currently on the docket, provides for mandatory fee-shifting for patent lawsuits that the courts determine are not "reasonably justified." In reality, however, the average costs of patent litigation are large ($1 million to $4 million) and the process is drawn out. Even with the prospect of post-trial fee shifting, patent litigation targets may thus find it cost-effective and less disruptive to simply settle with NPEs, even in unfounded lawsuits. According to the authors, this is not a sufficient solution.

The text skips over the fact that the burden is on the loser to show the case was "reasonably justified." The text of the bill requires courts to award prevailing parties reasonable fees and other expenses incurred in connection with such actions, unless: (1) the position and conduct of the nonprevailing party was reasonably justified in law and fact; or (2) special circumstances, such as severe economic hardship to a named inventor, make an award unjust.

This reversal of burden over the present law is the source of much opposition to the Innovation Act.

The piece also notes

So what should be done? Cohen, Gurun, and Kominers say that policies should screen out trolling at or before the time of patent assertion. The authors recommend advance review procedures that would provide preliminary evaluation as to whether the plaintiff's infringement claims are reasonable and whether the asserted patents are of high quality. Such advance review could cripple trolling, they conclude; pre-litigation review can separate good NPEs (and, more generally, good patent lawsuits) from bad. Legitimate infringement claims will be encouraged, whereas trolling will be screened out. This would greatly benefit innovative companies and help them propel the U.S. economy to greater heights.


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