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Innovation Bill Could Diminish Value of IP, Warns LES Vice President

Tuesday, November 19, 2013  
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US legislative action against so-called 'trolling' could have negative consequences, Catherine White reports

Originally published in the Intellectual Property Magazine December 2013/January 2014 Edition

Bob Goodlatte's US Innovation Act to stop 'frivolous' patent claims is a so-called "fix" that will likely create "profound and unintended" negative consequences, Brian O'Shaughnessy, RatnerPrestia shareholder and  regional vice president of the Licensing Executives Society (LES) told IPM.

In an exclusive interview, O'Shaughnessy said while the bill has some merits and good intentions, certain members in Congress are trying to "utilise an ill-informed sense of urgency" to push through the legislation without getting sufficient user community feedback. 

He added that "with all the changes being implemented as a result of the America Invents Act, it is imperative to the health of the system that we approach further change cautiously, and with extensive input from the user community".

The HR 3309 bill, discussed at the US House Judiciary Committee in October by Goodlatte and other Congress members, is designed to keep the patent law up-to-date, while amending the US' 'damaged patent system' that has resulted in a litigation playground.

However, O'Shaughnessy, who chairs the LES public policy committee, believes that the most effective way to remedy litigation abuse is through evolution of case law, where judges might become more "assertive" with their use of Rule 11 under the Federal Rules of Civil Procedure, which provides for sanctions against frivolous cases, or failure to conduct appropriate due diligence before bringing suit.

"If more judges bring the power of Rule 11 to bear more aggressively, then lawyers themselves know they will be on the hook, and this will in turn be an effective means to shut down abusive litigation," he said.

O'Shaughnessy called the claim that the US patent system is 'broken' a "complete fallacy", and accused its advocates of trying to disrupt the patent system for their own gain.

"I think the patent system in the US is the best in the world. It is extremely well run, that's not to say there isn't room for improvement – especially in the area of patent quality – but this is a problem that is relatively easy to fix," he said.

"For example, by reinvesting all the money the US Patent and Trademark Office collects in fees back into its infrastructure and personnel, we can then get the quality of examination that everyone wishes we have."

He added that the bill will not stop 'frivolous claims' and its attempt to either define 'trolls' or 'trolling behaviour' invites gamesmanship.

"We all know that as soon as the bill passes, there will be lawyers looking over it, trying to figure out how they can continue to do what they're doing today merely by exploiting the intricacies of the bill. Because legislators are not in the business of IP exploitation or enforcement, they don't really understand the rudiments of the game. As a result, those who wish to do so will likely devise ways to subvert the aim of the legislation," he said.

There are currently seven bills targeting 'patent abuse', with the Electronic Frontier Foundation calling Goodlatte's bill "the best patent troll-killing bill yet".

O'Shaughnessy said if HR 3309 bill comes into force there could potentially be serious ramifications for the US, innovation, economic growth and IP.

"I'm concerned it will result in the diminished value of IP because if it's harder to enforce IP, then the IP itself has less value. If IP has less value, then there will be less innovation, so this will result in fewer new life improving products.

"The founding fathers were very clear that the patent system was designed for a particular purpose – to promote the progress of the useful arts. These bills have very serious potential to diminish that progress," he warned.

Download the pdf version of the article here.