The ability for the federal government to issue patents is governed by the United States Constitution, Article 1, Section 8, Clause 8, “The Congress shall have the power . . . to promote the progress of science and useful arts by securing for limited times to . . . inventors the exclusive right to their . . . discoveries” (1787). Although recited in the powers of Congress, the right to issue patents has been delegated to an administrative agency within the Commerce Department, the United States Patent and Trademark Office (USPTO, 2013). The ultimate enforcement of patents is overseen by the federal and state judiciary, through a system of federal patent and state unfair competition laws that are applied in court. The executive branch’s impact on this area of federal policy includes the oversight of the USPTO by the Secretary of Commerce and various executive orders and policy directives that, as has occurred in the present administration, can be championed by the President (The White House, 2013). Thus, the federal area of promoting innovation through patent-based policy-making exhibits significant tension between the various branches of the federal government and involves complex issues in the ultimate enforcement of these federal patent policies.
Recently, President Obama has issued executive orders concerning a problem facing the issuance and enforcement of patents, specifically, the effect of so-called patent trolls (The White House, 2013). Patent trolls are actually difficult to define well, but can be generally understood an organizations that litigates based on a patent but does not actually practice the invention themselves (Hannon & Welsh, 2013). Accordingly, another term that is used for a patent troll is a non-practicing entity (NPE). Through the executive act announced on June 4, 2013, the Obama administration has adopted an official, federal anti-patent troll policy. This essay will examine the pros and cons of this recently adopted federal position by first determining its consistency with the federalism directive in this area and, second, will consider the policy’s potential effectiveness in promoting that directive.
The federal directive for patents is specifically spelled out in the Constitution, “to promote the progress of science and the useful arts” (U.S. Constitution, 1787). In more recent times, this has been translated into the promotion of innovation. So the first question to be examined with this federal policy is whether being anti-patent troll promotes innovation. The precise effect of patent trolls, or non-practicing entities, on innovation is controversial. On the one hand, commentators have identified the serious negative effect of patent trolls on the economy, most recently in parts of the computer industry where it appears to be hampering innovation for application developers (Shaughenessy, 2013). Developers are getting sued before they even have a product on the market and the legal burden of dealing with these very early threats at a time when there are no resources to handle those kinds of issues is pointed to as having a dampening effect on the industry innovation.
On the other hand, other commentators have taken the position that patent trolls are being unjustly targeted. In particular, analysis has shown that there is very little difference in the litigation effect of patent trolls and that by practicing patent owners (Risch, 2012). In fact, it is extremely difficult to separate organizations characterized as patent trolls from practicing entities based on their patent litigation practices, as any attempt to make a meaningful definition between the two ends up including other organizations, such as failed companies, universities, and individuals who do not practice within the field, but have still made the investment in obtaining patent protection for their ideas (Hannon & Welch, 2013). Finally, many of the “myths” that are used to vilify patent trolls have proven on closer examination to not be true. Some of these false myths include, this is a new phenomenon, the patents asserted are of low quality, the troll purchased the patents from failing businesses thus taking advantage of the original owner’s misfortune, and the timing of the suits tend to be highly aggressive, occurring right after the patent issues (Risch, 2012). Thus, a large part of the emotional arguments against patent trolls appear to be very rare, anecdotal situations that do not actual portray the usual patent litigation behavior.
Nevertheless, within this controversy the Obama administration has come out with an express anti-patent troll policy. The one certain thing is that this stance is highly supported by the computer industry, a group that is behind the starkest criticisms of patent trolls. Because of the continuing contradictory data as to whether or not patent trolls truly stifle innovation, it is uncertain whether this federal policy actually forwards the federal directive or not. This is important because the executive branch should not be acting without certainty that what is proposed forwards the federal mandate for supporting innovation. Many in the business arena support Obama’s efforts and others, particularly in the computer industry, argue that the Obama executive orders have not gone far enough (Levick, 2013).
This position is better understood given the actual content of Obama’s patent troll directives, which included five executive actions (The White House, 2013). Interestingly, one of the executive actions is an outreach effort that would produce more research and data regarding the precise question of what effect patent trolls have on innovation. Two of the executive orders related to judicial enforcement of patents, targeting practices of patent trolls including using shell corporations to do their lawsuits and suing end users rather than manufacturers of a patent product. Another order was directed at the Customs department concerning excluding for import infringing goods and a final action directed the USPTO to focus on making it more difficult to obtain a particular type of patent claim that has been characterized as being commonly used by patent trolls in their litigations (The White House, 2013). Further, the action also included seven recommendations to the legislative branch. On their face, it does appear that these efforts could reduce the ability of patent trolls to negatively impact innovation, although some commentators feel the efforts are weak (Quinn, 2013).
As can be seen by the inclusion of all branches of the federal government in the activities involved in this one piece of policy-making related to patent trolls, there is a significant amount of federal cross-conflict involved in trying to carry out this policy. Further, with the request for further research and data-gathering within the executive order itself, there seems to be an admission that it is not entirely clear that the policy against patent trolls will or will not forward the federal directive of supporting innovation. Despite this situation, there is no doubt that many businesses, including the computer industry and the retail industry, are behind these governmental efforts to bring about change in this area. As with all complex issues, change arising from all branches of the federal government – judicial, legislative, and executive, in this case, an administrative agency -- will be necessary to impact the current situation with patent trolls. That is, if ultimately a true negative effect of patent trolls on innovation can be shown in a more clear fashion than what is presently available.
References
Hannon, B. W., & Welsh, M. M. (2013). Challenges of defining a patent troll. Bloomberg Law. Retrieved from
http://about.bloomberglaw.com/practitioner-contributions/challenges-of-defining-a-patent-troll/
Levick, R. (2013 June 21). Who really ignited Obama’s move against patent trolls?. Forbes. Retrieved from
http://www.forbes.com/sites/richardlevick/2013/06/21/who-really-ignited-obamas-move-against-patent-trolls/
Quinn, G. (2012 June 4). Obama on patent trolls – Much ado about nothing. IPWatchdog.com. Retrieved from
http://www.ipwatchdog.com/2013/06/04/obama-on-patent-trolls-much-ado-about-nothing/id=41268/
Risch, M. (2012). Patent troll myths. Seton Hall Law Review. 42:457-99.
Shaughnessy, H. (2013 July 4). Patent trolls are now crushing parts of the developer economy. Forbes. Retrieved from
http://www.forbes.com/sites/haydnshaughnessy/2013/07/04/patent-trolls-are-now-crushing-parts-of-the-developer-economy/
The White House (2013 June 4). White House task force on high-tech patent issues. [Fact Sheet]. Whitehouse.gov. Retrieved from
http://www.whitehouse.gov/the-press-office/2013/06/04/fact-sheet-white-house-task-force-high-tech-patent-issues
United States Constitution (1787). Article 1, Section 8, Clause 8. The copyright clause.
United States Patent and Trademark Office (USPTO). (2013 May 16). What is a patent?. Uspto.gov. Retrieved from
http://www.uspto.gov/patents/index.jsp
