As noted earlier on the Malloy & Malloy IP Blog, even the White House has recently joined the national discussion on what many perceive as increasingly widespread and over-aggressive tactics by “patent trolls.” Patent trolls, which are less pejoratively known as patent assertion entities (PAEs) or non-practicing entities (NPEs), are persons or companies who legitimately obtain patent rights and then enforce the patents against alleged infringers, without actually making or using the patented inventions themselves (which is perfectly legal). There has traditionally not been a great degree of public concern about such practices other than by those on the receiving end of patent enforcements, although public sentiment has been building over the past several years in reaction to a substantial increase in more aggressive activities of this kind.
Given the surge in patent lawsuit filings by NPEs in recent years (some assert that a majority of all patent lawsuits were brought by NPEs in 2012), it is not surprising that there has been an increase in public awareness as well as increased administrative and legislative attention, including recent action by the ITC, the White House, members of Congress, etc . These efforts are not necessarily aimed at totally preventing such activity, but rather appear to be directed at preventing abuses of patent rights. For instance, some proposed legislative and administrative actions seek to address certain formalities by which patent infringement lawsuits or similar proceedings are filed, in efforts to achieve balance with the constitutional goal of promoting “the progress of science and the useful arts” (U.S. Constitution, Article 1, Section 8, Clause 8). Naturally, there will be disagreements on which particular new laws and regulations will best serve the Constitution’s enduring goal, although from a legislative standpoint, it would not be surprising to see upcoming action similar to that taken against over-aggressive qui tam false patent marking filings in the 2009-2011 timeframe, which was ultimately addressed by the America Invents Act (AIA) in September of 2011.
Regardless of how the policy on PAE/NPE activity develops, it will likely affect participants in similar — yet somewhat different and arguably more traditional — patent “pools” which involve groups of patent holders who generally practice at least some of the inventions protected by their patents. Patent pools allow patent holders to collaborate with peers (sometimes even with competitors) to cross-license groups of technologically related patents to the exclusion of others not joining in the patent pool. It is believed that the overall benefits of such collaboration outweigh the perceived costs of substantial, ongoing litigation, particularly among the patent pool participants. It is conceivable, however, that the greater the number of patents in a given patent pool, the more likely at least some of those patents might not actually be practiced by one or more of the patent pool participants. It will therefore be interesting to see how such activities are affected by the national debate on “patent trolls.” In this regard, reference is made to an informative article on patent valuation, particularly in the context of large portfolios such as the KODAK patents and others, which involve thousands of patents.
Finally, it is noteworthy from a timing perspective that just while the “patent troll” debate is beginning to enter the limelight, a new patent rights exchange, “IPXI,” has come online, which appears to be one of the first market-based exchanges for patent rights and features patent portfolios of several prominent corporations and universities. Here, too, it will be interesting to follow the downstream effects on such patent exchanges as the “patent troll” debate continues.