Why Patent Reform Requires Legislation

Mytheos Holt
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Posted: Aug 07, 2015 12:01 AM
Why Patent Reform Requires Legislation

Having exhausted their grab bag of scare tactics, untruths, and misleading arguments, patent reform opponents seem finally to have grasped that their stalling is failing. One way or another, patent reform is going to happen. The only question is when and how.

However, as a last ditch effort to stop what many of their most unethical members see as the legislative equivalent of a going out of business sign, they have resorted to a rather weak final argument. “Yes, patent reform is needed,” they admit sheepishly, “but not necessarily from Congress. Leave it up to the Courts; after all, they’re already cracking down on patent trolls. Why let legislators muck up what could otherwise be a more gradual, rational process?”

Exhibit A for this argument comes from Timothy Holbrook, a Professor of Law at Emory University, who wrote a piece on precisely this topic last week at The Conversation. Quoth Holbrook:

Congress has reacted, with patent reform legislation on the verge of passing. The legislation is targeted at trolls and contains myriad provisions: creating standards for pleading a case far beyond other forms of litigation, making the loser pay in patent litigation and limiting discovery until the court has interpreted what the patent covers. There seems to be much enthusiasm for such reform, with reform bills making it out of committee in both the House and the Senate in a surprising show of bipartisanship.

Except, we don’t need it, at least not yet.

The patent system is already in the throes of dramatic change, the impact of which we are only now beginning to feel.[…]

The changes that have already taken place came from both Congress and the courts.

The Supreme Court, in particular, decided numerous cases in 2014 that could alter dramatically the ability of PAEs to operate. The court made it easier, for example, to force PAEs to pay their opponents' attorney fees when the PAE loses, making trolls' suits riskier and potentially less profitable.

Now, to give Holbrook some credit, his argument isn’t entirely wrong. There have indeed been changes that have taken place within the court system that are supposed to make patent trolling harder. And to the extent that these changes flow from the Supreme Court, they should have a nationwide effect, at least in theory.
However, arguments like Holbrook’s ignore three key factors that make legislation, not just judicial discretion, the only way to deal with trolls.
Firstly, even if the courts have started to take action against trolls (and they have), you wouldn’t be able to tell by the recent behavior of patent trolls. Holbrook dismisses a statistic that shows that 60 percent of all patent lawsuits filed in 2013 were filed by trolls. However, what he doesn’t seem to realize is that his figure is out of date. So far this year, patent trolls account for 70 percent of patent lawsuits, according to data from the RPX Network. Not only that, but the numbers of these lawsuits have even increased month by month compared with last year. Granted, trolls might be doing this out of panic that their model might soon be extinct, but that hardly does anything for the people being targeted with even more frivolous lawsuits right now. Holbrook would no doubt say that this is a function of legal changes taking time to percolate through the system, but how much legal extortion are we willing to tolerate while those changes percolate, if a single bill could cut it off at the knees this instant?
Secondly, what Holbrook doesn’t seem to realize is that the “percolating” he’s talking about has already happened nearly everywhere, yet patent lawsuits continue to balloon. Why? Because the problem isn’t so much that a bunch of courts are behind the times, as that one specific court is. I refer to a single federal district court in East Texas, which is where most troll lawsuits end up being filed, due to the exceedingly anti-defendant practices of its presiding judge. In fact, according to Ars Technica, that judge’s practices arguably fly in the face of a Supreme Court decision that Holbrook himself cites as one that is supposed to stop abusive patent litigation. Granted, these decisions can (and have) been appealed, but again, how much time do appellate courts have to waste telling one rogue East Texas judge to do his job, if legislation could solve the problem now?
Thirdly, Holbrook frets that universities and inventors might end up inadvertent targets of patent reform. But this, too, is false. The reason universities don’t like the concept is not because their own patent lawsuits would fail, but because they often make a killing selling their patents to troll companies! It’s understandable that universities (like the one that employs Holbrook) might not want to stop the troll gravy train, but that’s no reason to let them scare us out of the concept.
As for inventors, as the Electronic Frontier Foundation points out, some provisions of the most popular patent reform bill currently outstanding in the House, the Innovation Act, actually make challenging patents harder in precisely a way that would favor small businesses and inventors. So not only can legislation target the most abusive actors without having spillover effects: the most recent version already does.
The fact is that, with hundreds of troll lawsuits being filed every month to extort money from America’s innovative giants – companies like Google, Apple, and Facebook – a slow, gradual procession of court decisions cannot solve this rapidly spreading epidemic. It needs to be cut out at the roots. Holbrook’s argument no doubt comes in good faith, but its inaccuracy and excessive caution prevent its being taken as anything but a last ditch defense of a broken system.