Intellectual Property Alert: Massive Increase In "Patent Trolls" Elicits Legislative Recommendations And Executive Actions


The Leonard, Street and Deinard patent litigation team helps clients on a daily basis to defend against and resolve threats of patent infringement by Patent Assertion Entities (PAEs, often referred to as "patent trolls"). If you receive a request or demand that your business license a patent from anyone, we suggest that you contact our patent litigation team immediately for advice on how to effectively and efficiently handle such threats.

PAEs are commonly defined as entities that are created solely to sue for patent infringement and that have not invested in either the research and development underlying their acquired patents or in actually making any products. PAEs make litigation threats and file lawsuits against companies of all shapes and sizes, often for simply using common equipment such as multi-function printers and Wi-Fi routers. Some estimates suggest that more than 100,000 companies were threatened by PAEs last year and that upwards of 60% of all current patent infringement court cases are now PAE cases.

The Obama Administration is addressing the growing concern over PAEs by setting forth a list of legislative priorities and executive actions, including the following:

Legislative recommendations:

  • Before suing or sending demand letters, require that patent holders must disclose who actually owns the patent.
  • Enable the courts to more readily award attorneys' fees in patent cases.
  • Allow for more challenges within the Patent Office against business method patents that are computer-enabled.
  • Provide more protection against infringement claims and costly litigation for consumers of off-the-shelf products.
  • Change the U.S. International Trade Commission standards for granting injunctions against product imports to be more like the stricter standard used by the federal courts.
  • Incentivize public filing of demand letters for greater access and use by the public.
  • Provide resources for the U.S. International Trade Commission to hire qualified judges.

Executive actions:

  • Make the real plaintiff in a PAE case more clearly identified so that defendants can see connections between multiple PAEs and coordinate defenses.
  • Create greater scrutiny in the Patent Office before allowing patents to issue claiming how an invention functions, in particular in the area of software.
  • Provide educational materials to help product users know their rights when they are threatened with patent infringement for merely using a common product.
  • Expand executive agency outreach and study to consider the PAE issue and possible new laws.
  • Create more consistency and quality in import exclusion orders from the U.S. International Trade Commission.

Go here to read the White House Fact Sheet regarding PAEs.

Go here to read an overview of PAE concerns from the Executive Office of the President.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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