Trolls are as trolls do.
That might be the most important point made in a new White House report on patent litigation that accompanied the Obama administration’s first foray into a debate on whether to tweak or possibly enfeeble the patent system. And while the White House’s involvement in such a legislatively hot issue may have been inevitable, it’s a shame that such a valid point comes mixed with dubious data and adoption of some imprudent ideas circulating in Congress.
Four separate patent-related bills have been introduced in the House and Senate, with an informal draft of another version passing around the House. But the debate so far has included more fury than fact about so-called patent assertion entities – a.k.a. PAEs or trolls – who own patents for technologies but do not themselves manufacture.
The new report, out this month from the President’s Council of Economic Advisers, the National Economic Council and the White House’s Office of Science & Technology, takes a welcome step back from the shrill tone resonating through most patent speeches on Capitol Hill by recognizing that any problems in the system come from bad behavior, not from a particular kind of patent holder.
It states right up top: “Some firms that own patents but do not make products with them play an important role in U.S. innovation ecosystem, for example by connecting manufacturers with inventors, thereby allowing inventors to focus on what they do best.”
Unfortunately, the report goes on to cite questionable findings from discredited studies trying to quantify PAE-related lawsuits and their economic consequences. Most surprising is the fabled $29 billion economic toll of troll lawsuits in 2011 – a number found frequently in blogs and on Twitter, and even cited on the floor of the House when one bill was introduced earlier this year. Yet that number comes from a study with a definition of “troll” so sweeping – it includes universities and anyone who owns an invention they don’t themselves manufacture – that it’s meaningless, while the data behind the study was gathered by a company whose business it is to fight patent suits and who told its surveyed customers their answers would be used to legislate policy. The results were predetermined.
For a White House that prides itself on fact-based policy, these numbers suggest the patent issue wasn’t taken seriously enough to merit the rigor of a full administration policy review.
Still, the report steps back again from the outcry heard in debates in Congress with some historical context: In centuries past, it notes, periods of great technological advances for agricultural or railroad equipment brought waves of new patent lawsuits that subsided without Congress intervening on behalf of one side of the dispute or another and potentially weakening a system that nurtures inventions and was envisioned in the Constitution.
Moreover, the report adds a cautionary note possibly aimed at members of Congress who seek wholesale patent changes they haven’t thought through and could cause adverse, unintended consequences.
“Improving policy in this area is challenging because maintaining the incentives for innovation provided by patents requires allowing litigation when patents are infringed, and because practicing firms sometimes act badly as well,” it says.
The timing of the White House’s announcements was puzzling, with some news media quick to speculate that it was more about politics than policy.
The president just a few days later made a political-fundraising stop in Silicon Valley, which is where many of the attacks on the patent system originated despite the key role played by the U.S. intellectual property system in allowing many of the local tech giants to get where they are today.
But the president’s role – and backing for – this week’s patent talking points are puzzling as well.
The White House announcement, which lays out seven legislative recommendations and five executive branch actions, offered no new presidential statements. Instead, it quotes remarks Obama made off the cuff during a Google fireside chat four months ago when he said the seven-plus years of debate resulting in the 2011 American Invents Act “went about halfway to where we need to go. What we need to do is pull together additional stakeholders and see if we can build some additional consensus on smarter patent laws.” That remark seemed a clear attempt to avoid taking sides, even as it ignored how divisive and polarizing the long AIA process had been.
That neutrality in the patent debate – welcome, if sincere -- was present again in this week’s announcement that the White House will expand its outreach efforts to include “six months of high-profile events across the country to develop new ideas and consensus around updates to patent policies and laws.” And that half-year fact-finding timeline is a reminder that the current round of patent-related legislating could take a long time.
But then the neutrality melts away in the White House’s legislative recommendations, which add little to the slate of possible changes circulating on Capitol Hill. One dangerous suggestion would make software patents – like those protecting mobile video transmission, GPS guidance and real-time linguistic translations, to name but a few key technologies that are software inventions – more vulnerable to infringement than other inventions simply because they are “computer-enabled,” as if that made them any less likely to come from years of expensive research. Another would weaken patent enforcement at the International Trade Commission (ITC) even as one of the new executive actions – executive actions, not the more legally definitive executive orders – would strengthen the enforcement process at the ITC.
The White House apparently wants to be seen joining the patent debate, but doesn’t appear to have thoughtfully made up its mind how to do so.
And yet, there’s a pretty strong case circulating in patent circles right now for why the administration should take sides -- in support of a patent system that encourages the kind of disruptive innovation that will drive U.S. competitiveness and future job creation.
David Kappos, the respected former director of the USPTO during Obama’s first term, takes a deep, hard look at the arguments and data on both sides of the patent debate and at software patents in particular. Writing in the Stanford Technology Law Review, he says patent system critics are being dangerously shortsighted about protections that represent the country’s investment in its future.
After running through the critics’ arguments, Kappos notes they rest on little empirical evidence, and he puts them in the context of “historical tension between the necessary long-term incentives that form the basis for the patent system, versus the desire of consumers to have products and services today at the lowest prices possible.”
“The patent system has always engendered bipolar reactions,” Kappos writes. “Going back to the dawn of the industrial revolution, we have celebrated the inventors of the steam engine, the cotton gin, the telegraph, the sewing machine, the light bulb, the airplane, to name a few examples, while simultaneously decrying the patent disputes that followed them. Americans love inventors, and we love invention. We just don’t love paying for it.”
“But that is what our system for incentivizing invention -- our patent system -- is all about,” he adds. “It is a giant national investment engine, through which we forgo lowest possible prices for a period of time in order to get more great products, services and medical treatments in the future. The patent system is a continuing, ongoing, perpetual investment in our individual and our nation’s future.”