THE solitary, lumbering trolls of Scandinavian mythology would sometimes be turned to stone by exposure to sunlight. Barack Obama is hoping that several measures announced on June 4th will have a similarly paralysing effect on their modern incarnation, the patent troll.
According to this saga of intellectual-property misanthropy, these creatures roam the business world, buying up patents and then using them to demand extravagant payouts from companies they accuse of infringing them. Often, their victims pay up rather than face the costs of a legal battle. In one much-cited example last year, MPHJ Technologies and dozens of associated shell companies sent letters to thousands of small businesses demanding $900-1,200 per employee for using scanners which they claimed infringed patents. Vermont’s attorney-general is now suing MPHJ, accusing it of breaking state consumer laws.
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Mr Obama first declared war on the patent trolls in 2011 when he signed the America Invents Act. It was supposed to reduce the number of lawsuits but has not even slowed the growth rate. The trolls now account for perhaps half of the 4,000 or so patent cases a year in America. The president’s new proposals are intended in part to scare them off. Courts would gain powers to impose penalties on anyone bringing what they deem to be frivolous patent litigation. The ultimate owner of the patent involved in a lawsuit would have to be disclosed, preventing trolls from hiding behind anonymous shell companies. Those bringing cases would also have to be clearer about how their patent is supposedly being infringed.
Mr Obama’s powers to push through such changes by “executive order” are limited, so most of his proposed reforms will mean persuading Congress to pass new laws. He insists he has no desire to stop legitimate efforts to enforce intellectual-property (IP) rights. But his proposals have outraged those who see beauty in the beast. Troll-lovers argue that in buying and enforcing patents, they create a vibrant market in invention that maximises its financial rewards and thus encourages it. The Software Alliance, which represents some (but not all) big software firms, including Microsoft, said the proposals could “inadvertently put at risk innovation for many industries that rely on software, from manufacturing to biotech.”
Nathan Myhrvold, a wealthy former Microsoft executive, is regarded by his critics as the king of the trolls. His firm, Intellectual Ventures, describes as “misguided” the requirement to name the ultimate owner of a patent in court: he argues that doing so might reveal the owner’s commercial strategy to its rivals. Besides, as one of Mr Myhrvold’s partners put it last year, “The owner of the IP is irrelevant; the fact of the IP is what matters.” Yet even Intellectual Ventures concedes that, “Some of the president’s current proposals could help alleviate some of the issues that persist in the current patent system.”
One thing is clear: no one is entirely happy with how the patent system works. Trolls are not the only ones bringing big patent-infringement cases with far-reaching consequences. For instance, on June 4th America’s International Trade Commission found that Apple had infringed patents held by Samsung Electronics, and it banned several Apple products from being imported into America. Whether this sort of thing is good for consumers, or will encourage more Americans to invent things, is not patently obvious.
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