White House Takes Action Against Abusive Patent Litigation | Practical Law

White House Takes Action Against Abusive Patent Litigation | Practical Law

On June 4, 2013, the Obama administration issued a fact sheet detailing legislative recommendations and executive actions aimed at addressing abusive patent infringement lawsuits brought by Patent Assertion Entities (PAEs), often referred to as "patent trolls" by critics. 

White House Takes Action Against Abusive Patent Litigation

Practical Law Legal Update 0-531-2826 (Approx. 3 pages)

White House Takes Action Against Abusive Patent Litigation

by PLC Intellectual Property & Technology
Published on 04 Jun 2013 • USA (National/Federal)
On June 4, 2013, the Obama administration issued a fact sheet detailing legislative recommendations and executive actions aimed at addressing abusive patent infringement lawsuits brought by Patent Assertion Entities (PAEs), often referred to as "patent trolls" by critics.
On June 4, 2013, the Obama administration issued a fact sheet detailing a set of legislative recommendations and executive actions aimed at addressing abusive patent infringement lawsuits brought by Patent Assertion Entities (PAEs). Additionally, the National Economic Council, the President's Council of Economic Advisers and the Office of Science & Technology Policy released a report, entitled "Patent Assertion and U.S. Innovation" detailing the challenges and arguments for legislative action. According to the report, PAEs:
  • Engage in frivolous litigation hoping to make money from judgments or settlements rather than by producing products.
  • Hamper innovation by tying up legitimate businesses in expensive and time-consuming litigation.
  • Hurt small and inventor-driven companies, in particular.
  • Create shell companies which make it difficult for defendants to know who is suing them.
The report distinguished between PAEs, which engage in abusive litigation, and other non-practicing entities that, while not making products, own patents and play an important role in innovation.

Legislative Recommendations

The White House is recommending that Congress pursue the following measures:
  • Requiring patentees and applicants to disclose the “Real Party-in-Interest," by filing updated ownership information, before:
    • sending a demand letter;
    • filing an infringement suit; or
    • seeking USPTO review of a patent.
  • Providing the district courts with more discretion in awarding attorneys' fees to prevailing parties as a sanction for abusive patent filings.
  • Expanding the USPTO’s transitional program for covered business method patents to include a broader category of computer-enabled patents and permit a wider range of challengers to petition for review of issued patents before the Patent Trial and Appeals Board (PTAB).
  • Protecting off-the-shelf use by consumers and businesses by providing them with better legal protection, as well as, staying judicial proceedings against such consumers when an infringement suit has also been brought against a vendor, retailer, or manufacturer.
  • Bringing the International Trade Commission (ITC) injunction standard in line with eBay Inc. v. MercExchange, to make the ITC and district courts' approach more consistent.
  • Making demand letters available to, and searchable by, the public to help curb abusive suits.
  • Ensuring that the ITC has adequate flexibility to hire qualified Administrative Law Judges.

Executive Actions

The White House further announced the following executive actions designed to protect innovators from abusive litigation:
  • The USPTO will begin a rulemaking process to require patent applicants and owners to regularly update ownership information when they are involved in USPTO proceedings, specifically designating the “ultimate parent entity” in control of the patent or application.
  • The USPTO will provide new targeted training to its examiners on scrutiny of functional claims and will, over the next six months develop strategies to improve claim clarity, including use of glossaries in patent specifications to assist examiners in the software field.
  • The USPTO will release new education and outreach materials, including an accessible, plain-English website offering answers to common questions from those receiving demand letters from PAEs.
  • Outreach with patent stakeholders will be expanded with events to discuss patent policies and laws.
  • The US Intellectual Property Enforcement Coordinator will strengthen enforcement of ITC exclusion orders by launching an interagency review of existing procedures to ensure the process and standards used during exclusion order enforcement activities are transparent, effective, and efficient.
This White House action follows the recently-enacted legislation in Vermont designed to curb abusive patent litigation. For more information on Vermont's new law, see Legal Update, New Vermont Law Targets Abusive Patent Litigation.