At Technology Show, A Palpable Interest in Legislation to Curb Actions by ‘Patent Trolls’

LAS VEGAS, January 8, 2013 – One of the biggest public policy challenges facing the information technology industry is the ability for patent holders to sue entrepreneurs, according to a panel on “patent trolls” here at the Consumer Electronics Show.

A panel of entrepreneurs, non-profit groups and attorneys for major technology companies and Rep. Peter DeFazio, D-Ore., said that patent trolls cost more than $29 billion, a number produced last year by two Boston University professors. The professors were attempting to quantify the cost of patent litigation instigated by “non-practicing entities.”

Such non-practicing entities, derisively called “patent trolls,” are seen as purchasing intellectual property rights to patents, and then suing to stop businesses from developing products, applications or services that could be construed as infringing their patent.

Suzanne Michel, senior patent counsel at Google, took care to distinguish the business model of a company like Qualcomm, which owns patents on chipsets, which it then licenses to foundry companies to produce, from entities that she considered as a “troll.”

“Companies that come up with an idea, patent it, and license it is great for innovaiton and consumers.” By contrast, an undesireable situation occurs when “Somoene went out, bought a patent, and asked, how can I broadly construe this patent? It is simply a tax on innovation,” she said.

Morever, said Michel, the opportunity cost of distracting patent litigation imposes costs far greater than the $29 billion.

From the perspective of Rep. DeFazio, getting the attention of Congress is an uphill battle because Congress completed a signficant patent overhaul legislation with the America Invents Act of 2011. As DeFazio is not a member of the House Judiciary Committee, he said he had to struggle even to find a co-sponsor for his legislation addressing the issue of patent lawsuits.

In August 2012, he introduced his bill, Saving High-tech Innovators from Egregious Legal Disputes (SHIELD) Act.

An attorney with the Electronic Frontier Foundation urged the technology industry to flex their new-found political muscles against the entertainment industry.

“One year ago [at CES 2012], we were all taking about [the online piracy measures Stop Online Piracy Act, or the PROTECT Intellectual Property Act], and we all thought that SOPA and PIPA was going to become law,” said Julie Samuels, staff attorney for the Electronic Frontier Foundation. A few short weeks later, the tech industry was instrumental in defeating those bills.

“We weilding a lot of power last January, and we are still sitting on this,” Samuels said. “While there are a lot of roadblocks, now is the time; now is a moment” for legislation against patent trolls.

Lee Cheng, Chief Legal Officer and Corporate Secretary, Newegg Inc., urged measures that would limit the damages that non-practicing entities could obtain from patent lawsuits.

Google’s Michel urged the patent office to implement “better procedures for challenging these over-broad patents.”

Even though US Patent and Trademark Office procedures permit challenges of this sort for financial business methods, she said those measures should be extended to all software patents.

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