I will be honest: the title of this blog was a little hard to type. But I was reading an article in Reuters and it made me wonder: does the President believe in legal reform? On one level it would seem that he does. Just last week, he took steps intended to curb lawsuits brought by companies called “patent trolls.” These companies do not make or sell anything; they specialize in suing others for patent infringement. He asked for new federal regulations and action from Congress.
Of course the timing was advantageous. This position was announced ahead of an Obama fundraising trip to the Silicon Valley and it came at a time when lawmakers and courts are looking at ways to reduce the number of unwarranted patent lawsuits. These lawsuits have dramatically increased in recent years, particularly in the technology sector. Critics say those patent portfolios are assembled as a springboard to litigation; many firms argue that they are providing a service to inventors, or protecting against loss of licensing fees that users of patents should pay.
Big technology companies like Cisco, Apple and Google have been pushing for legislation that would reduce the number of times each year that they are sued for infringement. One of the proposals being pushed by the White House is legislation that would make it easier for a federal judge to award legal fees to the winner of a patent case if the judge deems the lawsuit abusive. Wow. Abusive lawsuits? The President actually recognizes that some lawsuits are abusive? Interesting.
Companies specializing in patent litigation filed 2,921 infringement lawsuits in 2011. According to Colleen Chien, a teacher of patent law at Santa Clara University of Law, the latest figures show that these companies initiated 62% of all patent litigation or 2,921 of 4,701 suits in 2012
There are already a couple of proposals in Congress. One is a bill put forward by Democratic Senator Patrick Leahy of Vermont and Republican Representative Robert Goodlatte of Virginia. Their measure would improve access to information about who owns patents, reduce discovery burdens in lawsuits, and make additional changes to enable judges to identify abusive cases early in the process and, presumably, dismiss them.
Another bill has been introduced by Democratic Representative Peter DeFazio of Oregon and Republican Representative Jason Chaffetz of Utah. Their bill would require certain plaintiffs to pay all legal fees if they sue for patent infringement and lose.
It is certainly refreshing to see bipartisan efforts in Congress to tackle these abusive lawsuits. Additionally, the President appears to see a clear abuse and wants it stopped. This coming from a guy who took over $27 million dollars from trial lawyers during the 2011/12 election cycle and when you Google his name and “legal reform”, almost nothing comes up. Whether it comes about via regulation or legislation, the abuse must stop. The absurd amount of money being spent on frivolous lawsuits is only hurting the economy and job creation in California and across the country.