Patent trolls and parasites: Why it’s important to curb special exemptions in patent reform efforts

Derek Hunter Contributor
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In days gone by, wedding officiants would ask the assembled guests if anyone knows of any reason the bride and groom shouldn’t be wed and “to speak now or forever hold their peace.” Rarely, outside of 80s romantic comedies, did anyone ever object, and that was the end of it; the happy couple were wed and legally conjoined. Imagine for a moment the chaos that would ensue if the opportunity to challenge the basis for that marriage remained open forever. Such a policy would provide anyone seeking to break up the marriage a limitless ability to do so. While this might be good for ex-boyfriends, romcoms, and daytime TV plot lines, it wouldn’t be good for marriage. The lack of certainty would inhibit everything from buying a home to building a family.

As ridiculous as it sounds, there is an equally ludicrous effort underway in Congress to apply the same type of open-ended, never-ending challenges to patents known as the Covered Business Method (CBM) review process. The concept of CBM was introduced into patents in 2011 when Congress passed the America Invents Act (AIA). AIA moved the U.S. from a “first-to-invent” system to a “first-to-file” system and CBM was implemented as temporary bridge program to provide an extended review period for certain financial services software that had been patentable since 1997.

CBM trumped the standard nine-month period in which patents may usually be challenged and allowed these financial services-related patents to be challenged at any time between the passage of AIA and the date the provision sunsets in 2020. A key feature of CBM was to stay any infringement enforcement actions during an eighteen-month review process automatically triggered by the U.S. Patent and Trademark Office (USPTO). While the valid need for such a process may be debated by many, the program was at least limited in scope and temporary.

Now, some mega-corporations, led by Google, are trying to make it permanent and expand it to cover any software that provides “business processes” which could mean, well, just about any software. The expansion of CBM would benefit serial patent infringers like Google by giving them an 18-month safe harbor during which time they could freely utilize stolen technology to gain market share and profits. In essence, they want to legalize theft.

Google had successfully included this provision in a patent reform bill currently moving through Congress. The Innovation Act, introduced by Rep. Robert Goodlatte (R-VA), Chairman of the House Judiciary Committee, is intended to curb frivolous patent litigation known as “patent trolls,” people or companies who buy up useless patents and sue large groups of people for “infringing” on them in the hope of obtaining a settlement. Curbing patent trolls is an important step in cutting down on frivolous lawsuits, but it should be dealt with cleanly, not loaded up with special deals for big donors.

A wide array of voices shared their concerns with the impact of CBM provision and Mr. Goodlatte wisely removed the language from his bill before passing it out of the Judiciary Committee.

Unlike the weddings of yore, that isn’t the end of it. Sources close to the issue say that Google is working with some of their Democrat allies in Congress to offer an amendment on the House Floor to insert their special CBM loophole language.

Rep. Goodlatte’s Innovation Act is an important effort to address pernicious frivolous litigation that is inhibiting job creation, innovation and economic growth. It would be a shame for Republican leaders to allow Google and their allies to poison an otherwise sound bill with such an egregious special interest property grab. Just as marriages require stability to flourish, so do innovators.

Creators must be able to rely on the certainty of the patent system to be incentivized to risk their treasure and devote their time to developing new and better technologies. Without the certainty ownership, and the prospect of a return on that investment, economic growth not only won’t, but it can’t happen.