Obama takes action to curb frivolous patent lawsuits against technology companies

President Barack Obama took steps on Tuesday aimed at curbing what the White House called frivolous lawsuits over patent infringement, directing his administration to craft new regulations and urging Congress to pass new laws.

The president’s package of proposed legislation and rule-making takes aim at suits brought by companies - disparagingly called “patent trolls” - that do not make or sell anything but merely license patents and sue others for infringement.

Freeing technology sector from patent trolls

Such lawsuits have ballooned in recent years, creating expense and aggravation for businesses, particularly in the technology sector.

Cisco Systems Inc , Apple Inc , Google Inc and other big technology companies have been pushing for legislation that would reduce the number of times each year that they are sued for infringement by “patent trolls”.

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Cisco, among others, has been further aggravated by companies that sue its customers - often stores and coffee shops - alleging infringement of certain patents merely because they provide Wi-Fi services or have a website.

The White House called on Congress to pass legislation to make it easier for a federal judge to award legal fees to the winner of a patent case if the judge deems the lawsuit abusive.

It also asked lawmakers to require companies that sue for infringement to have updated ownership information on file with the U.S. Patent and Trademark Office.

Obama’s actions were aimed at improving incentives for high-tech innovation, a major driver of economic growth, the White House said in a statement.

“Stopping this drain on the American economy will require swift legislative action, and we are encouraged by the attention the issue is receiving in recent weeks,” White House spokesman Jay Carney said in a statement.

The White House said Obama took executive action to direct the Patent and Trademark Office to construct new regulations that would make it harder for “patent trolls” to hide their activities using shell companies, the White House said.

Similar to proposed legislation, the rules would require patent applicants and owners to update ownership information when they are involved in patent lawsuits.

The patent office will also do more training of its examiners to try to prevent software patents with overly broad claims, and will provide clearer information for retailers and consumers who find themselves facing potential litigation, the White House said.

Congress already is working on legislation. The heads of the judiciary committees in the Senate and House of Representatives - Democratic Senator Patrick Leahy of Vermont and Republic Representative Robert Goodlatte of Virginia - have put forward a draft bill.

Their measure would improve access to information about who owns patents, reduce discovery burdens in lawsuits and make other changes to make it easier for judges to identify abusive cases early in the process and, presumably, dismiss them.

Many pieces of major legislation have faced partisan gridlock in recent years. But this bipartisan proposal, once finalized, is considered to have a good chance to move through Congress, particularly in the panels headed by Leahy and Goodlatte.

Another bill - introduced in February by Representatives Peter DeFazio, an Oregon Democrat, and Jason Chaffetz, a Utah Republican - would require certain plaintiffs to pay all legal fees if they sue for patent infringement and lose.

Senator John Cornyn, a Texas Republican, has introduced a bill to tackle the problem of discovery - gathering evidence in a court case - by limiting pre-trial document demands unless the plaintiff is prepared to pay for costs of producing more than “core documentary evidence.”

Reuters