June 4, 2013 | By Julie Samuels

The White House Takes Aim at Patent Trolls

Frustration with patent trolls, and momentum for reform, has been building for some time now. Today, the stakes got even higher when the White House announced that it was actively taking on the troll problem. This is big news, and not just because of the seven legislative proposals the White House recommends (more on those below). Even more important are the five executive actions the President intends to take with or without congressional help.

The news here is good. Not all of these reforms go as far as we'd like, but each takes on dangerous aspects of the patent troll business model. Numerous bills are pending before Congress and key policymakers have spoken out against patent trolls. Taken together with this statement from the White House, the message is clear: the time for patent reform is now.

First, the five executive actions:

  • Tighten functional claiming: requiring patent applicants to explain their inventions better and to limit those inventions to a specific way of accomplishing a task, as opposed to all ways of accomplishing a task. This is an important (and obvious) fix that should help stem the tide of overbroad software patents and increase patent quality.
  • Fix transparency: requiring patent owners to update records at the Patent Office with the patent's real owner. Taking away secrecy takes away one of the patent troll's favorite weapons.
  • Empower downstream users: ending the abuse associated with targeting end users, such as small businesses, startups, and even individuals who find themselves facing lawsuit threats and licensing demands for simply using everyday products. As the White House puts it: "End-users should not be subject to lawsuits for simply using a product as intended, and need an easier way to know their rights before entering into costly litigation or settlement." We couldn’t agree more.
  • Expand dedicated outreach and study: working with members of the community, including third-party stakeholders, to address flaws in the system. This would include increasing scholarly programs at the Patent Office, something that if done right could have a direct positive effect on patent quality by bringing in big thinkers to address systemic problems at that office.
  • Strengthen enforcement of exclusion orders: streamlining procedures for imported goods that are found to infringe U.S. patents.

Here's the thing: the President intends to do all of the above things by executive action (i.e. without Congress). That means he can make them happen now. Here's the even-better thing: the first four of these proposals are very encouraging. Some don't go far enough (we wish the White House called for broader immunity for end users facing lawsuits, for instance), but each would make the world better. (We have some concerns about granting the Executive Branch more power to enforce exclusion orders, especially given the abuse of power we’ve seen in the domain name seizures cases, but we await the proposal’s specifics.)

In addition to these executive actions (which we hope the White House puts into place quickly), the President put forth seven legislative proposals. They are:

  • Increase demand letter transparency: incentivizing public filing of demand letters in a way that makes them accessible and searchable to the public. Access to this information gives troll targets increased ability to fight back while removing much of the dangerous secrecy that the trolls currently operate behind.
  • Fix transparency: requiring patent owners to update records at the Patent Office as to a patent's real owner whenever they assert that patent, even if the threat is in the form of a demand letter. Again, taking away secrecy takes away one of the patent troll's favorite weapons. We're particularly encouraged to see the inclusion of demand-letter threats as a trigger for this requirement.
  • Expand fee-shifting: making it easier for courts to make losers pay when they bring frivolous law suits—something EFF has long supported. (Efforts like the SHIELD Act help push this forward. Tell your lawmakers to support such a bill.)
  • Expand review of business method patents: increasing the scope and duration of a program that allows robust patent challenges at the patent office, another program that we've publicly supported for some time.
  • Protect end users: ending the abuse associated with targeting end users, such as small businesses, startups, and even individuals who find themselves facing lawsuit threats and licensing demands for simply using everyday products by giving those end users legal tools to slow down or even stay litigation.
  • Change International Trade Commission (ITC) standard for injunctive relief: making it harder for parties to keep whole products out of the U.S. market based on claims of infringement, particularly when that infringement only covers a fraction of a whole product or when removal from the market would not be in the consumers' best interest.
  • Ensure ITC has flexibility in hiring.

The White House also announced the release of a new paper by the National Economic Council and the Council of Economic Advisers, called Patent Assertion and U.S. Innovation. We're still reading it, but the paper appears to appreciate the real harm that comes from patent trolls and recognize the risk that low-quality patents represent when they end up in patent trolls' hands.

With this comprehensive announcement, the White House joins the already loud chorus demanding reform of a broken system. We think each of these proposals is important, and each would make life harder for patent trolls and help get patents out of the way of innovation. While some proposals could be stronger (particularly with regard to fee shifting and protecting end users), we look forward to the upcoming debates that will surround them.

One glaring omission: a robust discussion about patent quality and the problem of vague, overbroad software patents. The flood of these low-quality software patents is at the root of this problem, and we cannot fully address the scourge of patent trolls without addressing those patents. (The proposal surrounding functional claiming should help increase patent quality, but it still ignores the larger question of whether we should be patenting software to begin with.)

We applaud the measures announced today, and believe that they would make the world safer for innovation. We also look forward to the day when the White House and Congress will take the next step, and engage in a serious conversation about whether patents should cover software to begin with.

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