So US president Barack Obama is planning to take action against patent trolls. He has announced five executive actions and seven proposed legislative changes directed at patents companies . Good luck to him.
There is no doubt that the issue of patent trolls needs to be addressed. According to figures from the White House, there has been a huge surge in the number of lawsuits being taken by trolls in recent years to the point where they now account for 62% of all patent lawsuits.
A supporting document produced by the National Economic Council and the Council of Economic Advisers highlighted the IT industry as one of the major factors in the increase in patent trolls. "There are an increasing number of computer and communications patents, whose wider breadth makes them more easily abused," it states, adding that up to 82% of defendants against patent trolls "were sued on the basis of a software patent" and software patents "are nearly five times as likely to be in a lawsuit as chemical patents".
The five executive actions include measures to toughen up scrutiny of patents by the US Patent Office to prevent the approval of sweeping patents that can be abused by patent trolls. This essentially goes to the heart of the matter because a significant number of actions being pursued are based on wide-ranging patents that can be applied to areas they were never intended to be.
But while patent trolls are a blight, they are not the only ones causing problems. Patents are now increasingly being used by reputable manufacturers as weapons of war against their rivals. According to the report, $15-20 billion was spent on patent litigation and patent purchases in the smartphone industry from 2010- 2012. In 2011, Apple and Google spent more on patent litigation and patent acquisitions than on research and development of new products,
Will Obama succeed? Possibly, but it is worth considering that the particularly litigious nature of the US system may be connected in some small way to the fact it has one of the largest numbers of lawyers per capita in the world at around one lawyer for every 280 or so people. In 2011, there were 1.2 million lawyers in the US which, according to some estimates, is more than the number of people serving in its armed forces. In addition, a large chunk of its political class is drawn from the ranks of lawyers.
In a country so blessed with lawyers it is perhaps a surprise to hear the US legal system is the most expensive in the world in proportion to GDP and costs roughly 150% more than the average Eurozone legal system, according to a recent study released by the US Chamber Institute for Legal Reform. With so many lawyers, you might expect the laws of competition to reduce the cost of the US legal system. However, given a choice between reducing costs in the market or increasing litigation, it appears that lawyers have plumped for the latter.
While the measures outlined by Obama are well-meaning, those that rely on congressional approval are likely to fall prey to the highly partisan atmosphere poisoning the US body politic. That is why it is probably more worthwhile to focus on the patent process itself to ensure patents that are granted are not (mis)applied in more wide-ranging manner at a later date. If that process is tightened up significantly, the opportunity for litigation or the threat of litigation around patents can be drastically reduced. That might be bad news for patent trolls and for lawyers but it is likely to be welcomed by everyone else.
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