White House to act against ‘patent trolls’

The White House announced a set of executive actions on Tuesday to crack down on abusive patent infringement lawsuits.

The steps will rein in firms, described by detractors as “patent trolls,” which acquire portfolios of patents and make money by suing other companies. Critics of these firms say they do not create new products themselves and hamper innovation by tying up legitimate businesses in costly court fights.

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The firms target companies creating new products, but they also go after small businesses using common technologies such as scanners or Wi-Fi networks. 

Many businesses agree to settle because the cost of fighting the charges in court would be so high. One Boston University study found that patent trolls cost businesses $29 billion in 2011 alone.

To help prevent those suits, the administration is taking a number of measures, including directing the Patent and Trademark Office to develop rules forcing companies to disclose the owner of a patent and to provide more training for examiners to identify overly broad patent applications.

The administration will also offer a website and educational materials for businesses facing patent troll lawsuits and will review the International Trade Commission's procedures for excluding infringing products from the United States. 

President Obama will also ask lawmakers to pass legislation that would give courts more discretion to penalize firms for frivolous patent infringement lawsuits. 

The White House's legislative proposal would also provide stronger legal protections for consumers and businesses using off-the-shelf products. 

"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," the White House said in a statement. 

"We stand ready to work with Congress on these issues crucial to our economy, American jobs, and innovation. While no single law or policy can address all these issues, much can and should be done to increase clarity and level the playing field for innovators," the administration added.

Congress has begun weighing a number of proposals to combat abusive patent claims. 

A draft proposal from House Judiciary Committee Chairman Bob Goodlatte (R-Va.) and Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) is believed to have the best chance of passing. 

Their proposal would limit the kinds of documents that firms could force their opponents to produce during the discovery phase of a trial, a major cost in patent litigation. The measure would also allow the manufacturer of a product to intervene to block cases against its customers over alleged patent infringement and would make a series of changes to the Patent and Trademark Office aimed at helping small businesses participate in the office's decisions. 

Unlike some other legislative proposals, the Leahy-Goodlatte measure targets abusive behavior by any firm instead of trying to define a "patent troll."

But the draft bill received a cold reception from some House Democrats, who are skeptical of efforts to limit access to the courts.

"We must first determine whether there is an abusive litigation problem by patent assertion entities that warrants a legislative response," Reps. John Conyers Jr. (D-Mich.) and Mel Watt (D-N.C.), key Judiciary Committee members, said in a joint statement.

Obama's action on Tuesday could help persuade liberal lawmakers to back patent troll legislation.

Obama addressed the issue of frivolous patent lawsuits earlier this year. In a Google+ hangout session, Obama said firms that brought those cases “don’t actually produce anything themselves.”

“They are essentially trying to leverage and hijack someone else’s idea and see if they can extort some money out of it,” he said.

This story was posted at 6:56 a.m. and has been updated.