The White House moved on Tuesday to crack down on abuses of the patent system, responding to mounting concern among technology companies over a flood of litigation which some say stifles innovation.
The latest moves target so-called “patent trolls” which, according to the White House, “hijack” ideas and take other companies to court with an eye to collecting license or royalty fees.
US President Barack Obama issued five executive orders and called for new legislation to update a reform enacted in 2011, a statement said.
“Innovators continue to face challenges from patent assertion entities ... that, in the president’s words ‘don’t actually produce anything themselves,’ and instead develop a business model ‘to essentially leverage and hijack somebody else’s idea,’” the statement said.
White House top economic aide Gene Sperling said there has been “an explosion of abusive patent litigation” in recent years.
“In the last two years, the number of lawsuits brought by patent trolls has nearly tripled,” Sperling said. “The victims of patent trolls paid US$29 billion in 2011, a 400 percent increase from 2005 — not to mention tens of billions dollars more in lost shareholder value.”
One of the signed orders calls for patent holders to have by default a “real party-in-interest” in a patent.
The order is aimed at creating more transparency by disclosing the true owners of patents and at preventing the use of secretive “shell companies” to hoard them.
The US president also signed measures aimed at ensuring “overall patent quality” to reduce the number of vague or broad patents which can be used to sue inventors.
The move drew praise from many US technology lobbying groups.
The White House action will help in “reining in abusive patent litigation,” TechAmerica’s Kevin Richards said.
“With the bipartisan support this issue enjoys, those great minds who are creating the next disruptive technology in their basement or dorm room can look forward to a system that preserves their idea,” he added.
Gary Shapiro, president of the Consumer Electronics Association, also hailed the move, saying Obama’s action “is on the side of innovation and job creation and against the spineless parasites of society who ruin American businesses.”
The Internet Association said it “applauds the executive actions,” adding: “We echo the president’s call for legislation to put patent trolls out of business for good... patent trolls are nothing more than extortionists.”
Julie Samuels at the Electronic Frontier Foundation called the actions “big news” which address “dangerous aspects of the patent troll business model.”
Dennis Crouch, a University of Missouri patent law specialist, said the moves are generally “welcome and will benefit the patent system as a whole.”
“In fact, this move to finally address the problem of predictability of patent scope and patent validity hits the sweet spot of where problems emerge in the system,” Crouch said in a blog post. “Of course, the devil will be in the details of these approaches.”
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