BTLJ Spring Patent Reform Roundup

With spring in the air, it is time to take another look at current news in the world of patent troll litigation. By now full-fledged media darlings, patent infringement lawsuits filed by non-practicing entities are everywhere you turn, garnering not just upvotes on Hackernews, retweets on Twitter, but time in the halls of Congress and the White House.

USPTO Hosts Silicon Valley Round Table

Patent trolls, otherwise known as non-practicing entities (“NPEs”) or patent-assertion entities (“PAEs”), are often vilified in legal scholarship and, lately, in the mainstream media as well. Without the USPTO granting slews of software patents, however, there would be fewer patents for these non-practicing entities to assert. Some of the current hand wringing over the epic rise in patent litigation of late focuses, as a result, on the USPTO. Accordingly, many were delighted when, last November, the USPTO announced its new director for the soon-to-open Silicon Valley satellite office. Michelle Lee, formerly a lawyer at Google, had scribed publically about the need for patent reform and specifically called out trolls. Consequently, her hire prompted much rejoicing.

Following this heralded move, the USPTO announced a “software partnership” roundtable session in Silicon Valley—ground zero for software innovation. At the meeting, held on February 12, stakeholders shared thoughts on software patents. The audio, for those inclined, is available here, here, and here. Colleen Chien, author of many groundbreaking studies on PAEs, explored the possibility of utilizing heightened application of 35 U.S.C. § 112(f) to construe patents as functional. Professor Chien analyzed several arguably functional patents including U.S. 5,930,474, which GeoTag asserted against 435 defendants in 115 lawsuits. The scope of patents like GeoTag’s would likely be “limited to the technology the patentee actually designed and equivalents known at the time the patent issued” in litigation should 112(f) be so constrained. According to proponents, such a limitation could profoundly affect many patents currently asserted in troll litigation.  Horacio Gutierrez, Corporate Vice President and Deputy General Counsel at Microsoft, also presented some thoughts about potentially limiting § 112(f). He noted that more rigorous enforcement of § 112(f) is “one part of the solution.” However, according to Mr. Gutierrez, this solution would not address issues such as inadequate notice and excessive breadth.

The USPTO’s roundtable showcased presentations from other members of the software community as well, all of which may be found on the USPTO website. After a second roundtable at New York University, the USPTO issued a request for public input on software-related patent topics. The comment period closed just recently, on April 15, 2013, and over 50 comments are posted online discussing various aspects of software patent reform. It remains to be seen what action the USPTO takes in response to these roundtables and the public’s feedback. In November, USPTO Director David Kappos argued that the USPTO “ha[d] done, and [was] doing a lot” already “to address the challenges posed by problematic software patents.” Kappos’ entreaty that software patent system critics “give the AIA a chance to work” and “give it a rest already” may provide a clue as to the likely result of the USPTO’s recent Silicon Valley patent roundtable. Time will tell.

Congress and Obama Weigh In

First introduced in Congress last August, the Saving High-Tech Innovators from Egregious Legal Disputes (“SHIELD”) Act returned to the docket in late February. The act, introduced by Representatives Peter DeFazio (D-Oregon) and Jason Chaffetz (R-Utah), originally focused only on software patents. In its new iteration, however, the bill applies equally to all forms of patents. The SHIELD Act’s primary provision would require NPEs pay opponents’ legal fees depending on the litigation outcome. Multiple organizations, including the Consumer Electronics Association, National Retail Federation, National Association of Manufacturers, and companies including Microsoft, Google, Adobe, Cisco Systems, Intel, Oracle, and Verizon, have put their weight behind the bill.

While it remains to be seen whether this powerful coalition can overcome Congress’s “patent fatigue” after contentious debates over the AIA, a recent weigh in from President Obama himself might provide some much needed political capital. In his Google+ Hangout, held after the State of the Union speech, the President responded to a question about what the government could do to promote innovation and respond to patent trolls. Obama took the bait and set his sights directly on NPEs, saying that “they don’t actually produce anything” and noting that they are a “classic example” of a block on innovation. The President even went so far as to describe NPE conduct as “extort[ion]” and “hijack[ing].” Perhaps referring to the USPTO roundtable efforts, President Obama indicated that the government “need[s] to pull together additional stakeholders” and “build . . . consensus on smarter patent laws.”

On the heels of both President Obama’s Google+ Hangout and the SHIELD Act’s reintroduction, the Judiciary Committee held a hearing on “Abusive Patent Litigation: The Impact on American Innovation & Jobs, and Potential Solutions.” Bob Goodlatte, Judiciary Committee Chairman, lauded the AIA as the “most significant reform to the patent system in [a] lifetime.” Despite its positive effect, however, the AIA left the PAE issue “on the cutting room floor.” Goodlatte promised to pick the issue up off the floor and “continue to take . . . steps” curtailing abusive patent litigation. Representatives from the usual technology company suspects, Adobe and Cisco, testified alongside newcomers to the topic from traditional retail giants J.C. Penney and Johnson & Johnson. Janet Dhillon, General Counsel for J.C. Penney, testified that PAE litigation is spilling over beyond the software and technology industry. J.C. Penney, which had no patent cases four years prior, has defended or settled over two-dozen patent infringement lawsuits in the last several years. The other witness transcripts, echoing Dhillon’s concern, can be found on the judiciary’s site 

Government interest in stemming the tide of patent trolls, like daily temperatures and sea levels, is rising. Since last winter’s patent troll round up, the USPTO has reached out to key stakeholders in its search to fashion solutions. President Obama, in January, put his hefty political weight behind the proposition that non-practicing entities are a drag on the nation’s economic recovery. With the judiciary committee hearing complaints from more than just technology companies, perhaps Congress will jump back on the patent reform bandwagon as well. Look out for more action, or at least posturing, on this issue moving forward into summer.