The White House moved Tuesday to crack down on companies that make money by suing other firms over patents, especially in the tech sector, rather than actually providing goods or services. These so-called patent trolls, which take other companies to court with an eye to collecting license or royalty fees, are seen as stifling innovation. The US government has been under pressure to stem such abusive litigation.
The White House said President Barack Obama issued five executive orders and called for new legislation to update a reform enacted in 2011. "Innovators continue to face challenges from patent assertion entities (PAEs), companies 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 and see if they can extort some money out of them,''" a White House statement said.
"Stopping this drain on the American economy will require swift legislative action... We stand ready to work with Congress on these issues crucial to our economy, American jobs, and innovation." The White House said new action is needed in the face of a flood of recent patent litigation, particularly in the smartphone sector, and because "several major companies spend more on patent litigation and defensive acquisition than on research and development." One of the signed orders calls for patent holders to have by default a "real party-in-interest" in a patent. This is aimed at creating more transparency, and disclosing the true owners of patents, to prevent the use of secretive "shell companies" holding patents.
The 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 TechAmerica, a major US technology lobby group. The White House action will help in "reigning in abusive patent litigation," said TechAmerica''s Kevin Richards. "Protecting innovators intellectual property is a key component to maintaining the competitive advantage the United States has over the world," 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."