Opinion: Regrettable White House Intervention on Patent Trolls

Nothing fires up a legislative debate like an unexpected White House intervention, and if the Obama administration’s patent-policy announcements this month were aimed at generating headlines and Capitol Hill conversations, they succeeded. See White House Task Force on High Tech Patent Issues.

But if the intent was to steer the debate toward a balanced approach that would curb frivolous litigation without imperiling an intellectual-property protection system so key to nurturing innovation and job protection in this country, the effort appears to have failed.

Please don’t get me wrong. There are plenty of good reasons for the White House to get involved.

There are nearly half a dozen patent-related bills or proposals under consideration in the House and Senate, and the debate is sorely in need of facts and serious study. Much of the proposed legislation would make wholesale changes to the patent system, ignoring two centuries of clear evidence that strong patent protection promotes innovation, economic growth and a higher standard of living for Americans.

And the new report from the President’s Council of Economic Advisers, the National Economic Council and the White House’s Office of Science & Technology cautions that “improving policy in this area is challenging because maintaining the incentives for innovation provided by patents requires allowing litigation when patents are infringed.”

The White House report also suggests members of Congress should adopt a more reasonable approach when it comes to so-called patent assertion entities – a.k.a. PAEs or trolls – who own patents for technologies but do not themselves manufacture, pointing out that any misdeeds in the system come from bad behavior, not a particular kind of patent holder.

“Some firms that own patents but do not make products with them play an important role in U.S. innovation ecosystem, for example by connecting manufacturers with inventors, thereby allowing inventors to focus on what they do best,” the report says.

There also seems to be some sense at the White House that facts must be established before any new lawmaking takes place. Among the administration’s patent announcements were plans to expand outreach efforts in the patent community with six months of high-profile events across the country, and a new program at the Patent and Trademark office for academic experts to develop “more robust data and research on the issues bearing on abusive litigation.”

That makes sense. The most recent major overhaul of the patent system, the American Invents Act, was passed by Congress just two years ago – after more than seven years of contentious debate – and fully came into fruition only this year.

What’s regrettable is that the White House didn’t wait for such empirical data on patent litigation and instead rehashed the findings of discredited studies of PAE-related lawsuits and their purported economic consequences. Specifically, I mean the infamous $29 billion victims are said to have paid to patent trolls in 2011, a number that has echoed around the Internet and made it into congressional debate despite its dubious origins. The number was produced by a study that failed to adequately define just what a troll is – even universities and many manufacturers were included – and then harvested its data not from a reputable polling or academic institution but from a company that has a dog in the patent fight and profits from fueling fears about infringement lawsuits.

How the number got into the report of a White House that cares a lot about science and fact-based policies is a mystery.

Even more troubling are some of the ideas included in the White House’s legislative recommendations, including one that would weaken the enforcement remedies at the International Trade Commission — despite a recent study that found international IP theft costs the American economy hundreds of billions of dollars every year.

As it happens, the White House announcements came days after David Kappos, the respected USPTO director during President Obama’s first term, produced a serious study on software patents and an argument for not treating them differently.

Kappos, writing in the Stanford Technology Law Review, examines the facts and arguments on both sides of the patent debate, and says the patent system critics are ignoring the “historical tension between the necessary long-term incentives that form the basis for the patent system, versus the desire of consumers to have products and services today at the lowest prices possible.” They are also forgetting how important a role the patent system has played channeling investment in the nation’s future, he says.

“Going back to the dawn of the industrial revolution, we have celebrated the inventors of the steam engine, the cotton gin, the telegraph, the sewing machine, the light bulb, the airplane, to name a few examples, while simultaneously decrying the patent disputes that followed them,” Kappos notes. “Americans love inventors, and we love invention. We just don’t love paying for it. But that is what our system for incentivizing invention — our patent system — is all about.”