White House issues executive orders to curb ‘patent trolls’
The White House issued a series of executive orders Tuesday aimed at curbing so-called “patent trolls” who use the legal system to stifle innovation, especially in the tech sector.
The move comes amid pressure to stem abusive patent litigation from companies that do not sell products or services, but sue other companies to collect license of royalty fees.
A White House statement said President Barack Obama issued five executive orders and called for new legislation to update a reform enacted in 2011.
“Innovators continue to face challenges from patent assertion entities (PAEs), companies that, in the president’s words ‘don’t actually produce anything themselves,’ and instead develop a business model ‘to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them,’” the statement said.
“Stopping this drain on the American economy will require swift legislative action… We stand ready to work with Congress on these issues crucial to our economy, American jobs, and innovation.”
The White House said new action is needed in the face of a flood of recent patent litigation, particularly in the smartphone sector, and because “several major companies spend more on patent litigation and defensive acquisition than on research and development.”
One of the signed orders calls for patent holders to by default have a “real party-in-interest” in a patent. This is aimed at creating more transparency to prevent the use of secretive “shell companies” holding patents.
The president also signed measures aimed at ensuring “overall patent quality” to reduce the number of vague or broad patents which can be used to sue inventors.
The effort drew praise from TechAmerica, a major US technology lobby group.
“The strong support by the White House adds to the strong bipartisan support that reigning in abusive patent litigation shares,” said TechAmerica’s Kevin Richards.
“Protecting innovators intellectual property is a key component to maintaining the competitive advantage the United States has over the world.”