Washington – The FTC has voted to seek public comments on a study that would examine companies whose main business is extorting money from patents, known as patent assertion entities (PAEs) or patent trolls. This is the first step in a broad federal investigation into the toll of patent trolls. Until now, this empirical data had been…
Patent law requires a robust and balanced approach, combining strong protection for patentees with a high-quality examination system designed to produce clear and unambiguous patents. The patent system must continue to promote innovation by existing companies, while also allowing the next generation of inventors to build new products and services. Low-quality patents, coupled with the high cost of defending against frivolous lawsuits, allow patent assertion entities (PAEs) to drain productive businesses of $29 billion a year in legal costs, according to a Bessen and Meurer study.
Recent years have seen a proliferation of PAEs, who acquire vague, low-quality patents and target startups and small businesses with frivolous lawsuits. These suits pressure job-creating enterprises into choosing between settling unmeritorious claims out of court, or facing bankruptcy. PAEs have expanded their range of targets across sectors to include restaurants, retailers, and even end users who purchase consumer electronics products like a scanner.
CCIA supports real patent reforms that include an end to venue abuse and measures to promote high-quality patents. Specific solutions include:
- Patent reform legislation, including venue reform and measures to limit abusive litigation by PAEs and protect end users. In particular, venue reform will help mitigate the phenomenon of PAEs bringing lawsuits to the Eastern District of Texas where procedures front load defendants with high court costs, pressuring them to settle lawsuits that the plaintiffs could not ultimately win.
- Patent quality improvements in the USPTO examination process to encourage more high-quality, clear patents, and reduce ambiguous patents with overly broad claims.
CCIA writes about current patent issues at its blog Patent Progress.