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IBM Chief Patent Counsel on Patent Litigation Reform


Written by Manny Schecter
Chief Patent Counsel, IBM
Posted: April 1, 2013 @ 6:00 am

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Chief Judge Randall Rader of the CAFC

As readers of IP Watchdog are aware, Federal Circuit Chief Judge Rader recently delivered an important and noteworthy defense of the U.S. patent system at the recent annual meeting of the Association of University Technology Managers (AUTM). I did not attend the event, but others have recounted that Chief Judge Rader’s remarks reminded attendees that the patent system is intended to promote innovation and asserted that patent litigation abuse is the main problem of our patent system.

According to Chief Judge Rader, patent litigation abuse (which he referred to as “litigation blackmail”) occurs when a plaintiff patent owner attributes a high value to an asserted patent with the intention of extracting a small settlement from an alleged infringer defendant. He went on to outline a four step approach to curb patent litigation abuse, summarized simply as:

•   Limits on e-discovery

•   Early particularization of issues

•   Early valuation

•   More liberal use of fee awards (loser pays)

These ideas have merit and I certainly tend to favor reforms that improve transparency and reduce litigation expense and uncertainty. Judges and litigants have the power to curb patent litigation abuse. It is also helpful if these ideas can be implemented without legislation– we already know that significant patent reform legislation requires considerable time and compromise.

But let’s not presume that patent litigation reform is all that is needed or all that can be done to help. I believe that Chief Judge Rader and other patent system users should focus on additional reforms that could contribute in a substantive way.

Recall that the USPTO has been publicly brainstorming (in both requests for written comments and roundtable events) about improving the transparency of patent ownership and enhancing claim clarity. These are important initiatives that have the potential to reduce patent litigation abuse before patent litigation ever begins, or to make it easier for judges to identify patent litigation abuse. Improved transparency of patent ownership could enhance manufacturers’ ability to assess whether already licensed to patents and, if not, to design around them, thereby reducing the likelihood of patent conflict. Building the record during prosecution could reduce claim term ambiguity often leveraged by patent plaintiffs and result in early particularization of litigation issues (the second of Chief Judge Rader’s outlined steps).

The patent system has served us well, boosting our innovation economy and in turn our standard of living. The patent system is not broken, but it can certainly be improved. I commend Chief Judge Rader’s leadership by calling out patent litigation abuse and reforms to address it. Let’s not stop there. We can and should do more – the resultant improvement to the system benefits us all.



About the Author

Manny Schecter is Chief Patent Counsel for IBM. Follow him on Twitter @MannySchecter.

3 comments
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  1. Manny-

    I agree that the patent system is not broken. While there are any number of things that can and should be fixed, whether it relates to patent litigation abuse or RCEs that take 2 to 4 years to process, there are things that can and should be improved. The fact that a system as complex as the patent system can be improved should hardly be shocking. But those who suggest the system is broken ignore the tremendous innovation that has been fostered as the result of the ability to turn investment in R&D into sustainable business models.

    Thanks for the contribution!

    -Gene

  2. Gene,

    Those like Bessen and Meurer (authors of the book “Patent Failure”) who denigrate the U.S. patent system get far too much credit for being “experts” when they are not, and not enough questioning about their bona fides when as they don’t know squat about patents.

  3. Mr. Schecter, I applaud your willingness to get out in front of common-sense reforms. I also deeply hope that your goodwill and agreement with Chief Judge Rader’s essential points somehow carries down the chain within IBM.

    In my personal bitter experience, one of your newly acquired subsidiaries (Kenexa) is conducting itself exactly as Judge Rader’s prongs describe: a plaintiff patent owner attributing a high value to an asserted patent with the (apparent) intention of extracting a small settlement from an alleged infringer defendant (six very small defendants in our action, and six others in another district).

    In our example, our market value is between 1% and 2% of the Plaintiff’s market value, the patent involves a tiny fraction of our offering’s functionality, the patent was originally prosecuted mid `90`s by a now defunct (and disreputable) company, and the patent subject matter is weak on multiple levels per the USPTO, a Federal Judge, and my own certain knowledge of the history of the invention.

    We can choose the honorable course of sacrificing some of our family financial security to invalidate the patents in suit, or we can choose to settle and essentially admit that we used something that did not belong to us. A good and functional system would not force this choice on us.

    In fact, a real power for reform may arise from the newly created symmetry in communication and search engine power to thoroughly expose and embarrass orgs that abuse the system. I sense from your interviews and writings on this site that you appreciate this new power. In social media terms: to the last I grapple with thee; from Google’s heart I stab at thee; for hate’s sake I type my last post at thee….

    Kenexa have conducted themselves with maximum legal aggression- I have already been warned not to discuss this matter on social media. You can see for yourself what I think of that suggestion.

    He went on to outline a four step approach to curb patent litigation abuse, summarized simply as:

    • Limits on e-discovery

    • Early particularization of issues

    • Early valuation

    • More liberal use of fee awards (loser pays)

    These ideas have merit