Software Patents & Patent Trolls: Understanding Obama's Measures


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Software Patents & Patent Trolls: Understanding Obama's Measures

  1. 1. ©2013 TechIPm, LLC All Rights Reserved www.techipm.comSoftware Patents & Patent TrollsUnderstanding Obama’s Measures2Q. 2013
  2. 2. ©2013 TechIPm, LLC All Rights Reserved 21. White House MeasuresRecently, the White House announced measures to improve US patentsystem to create jobs and economic growth ( White House issued five executive actions and seven legislativerecommendations.LEGISLATIVE RECOMMENDATIONS1. Require patentees and applicants to disclose the Real Party-in-Interest.2. Permit more discretion in awarding fees to prevailing parties in patent cases.3. Expand the PTO‟s transitional program.4. Protect off-the-shelf use by consumers and businesses.5. Change the ITC standard for obtaining an injunction.6. Use demand letter transparency to help curb abusive suits.7. Ensure the ITC has adequate flexibility in hiring qualified AdministrativeLaw Judges.*For issues regarding ITC, please refer
  3. 3. ©2013 TechIPm, LLC All Rights Reserved 31. White House Measures -2EXECUTIVE ACTIONS1. Making “Real Party-in-Interest” the New Default.2. Tightening Functional Claiming.3. Empowering Downstream Users.4. Expanding Dedicated Outreach and Study.5. Strengthen Enforcement Process of Exclusion Orders.One of the key issues is granting software patents in relation to PatentAssertion Entities (PAEs) that are commonly known as “patent trolls:”As the result of low cost for software inventions combined with abstract nature,a large number of low-quality software patens can be produced. A largepercent of the produced software patens are end up being litigated morefrequently in the courts, especially, exploited by patent trolls.*According to the recent research, titled „The AIA 500 Expanded: Effects ofPatent Monetization Entities,‟ patent trolls filed 56% of the patent lawsuits in2012.
  4. 4. ©2013 TechIPm, LLC All Rights Reserved 4* Patent PrivateeringPatent privateering is a new type of trolling practice that patent holders assigna PAE to engage in exploiting their IPRs (for the origin of privateering, see This kind of outsourcing practice ofpatent enforcement to PAEs can adversely affect to industries and consumers.First of all, patent privateering can increase patent lawsuits significantlybecause PAEs do not make products or services, and thus, they don‟t need toworry about counter lawsuits. Second, patent privateering can harm consumersdirectly because PAEs willingly sue consumers instead of manufactures orservice provides.For examples of patent privater, please refer
  5. 5. ©2013 TechIPm, LLC All Rights Reserved 52. Justification for Software PatentsThe fundamental goal of providing certain exclusive rights for a limited time toone‟s invention is to create incentives which can maximize social welfare(the difference between the economic benefits and costs) provided by thepatent system.As the society changed from industrial economy to knowledge economy,software, which is the fundamental technology for computer and internet, areappeared as the most important building block for the economic developmentof our society. Following the society‟s need for the development of softwaretechnology, the patent system came to provide the exclusive rights to softwareinventions.
  6. 6. ©2013 TechIPm, LLC All Rights Reserved 63. Critiques about Granting Software PatentsThe first critique is that software inventions will be made without providingexclusive patent rights as an incentive because the first-mover advantagegiven by an effective price differentiation provides sufficient incentive topromote software inventions.Ref. Stanley Besen & Leo Raskind, „AnIntroduction to the Law and Economics of Intellectual Property,‟ Journal ofEconomic Perspectives (1991).
  7. 7. ©2013 TechIPm, LLC All Rights Reserved 73. Critiques about Granting Software Patents -2The second critique is that strong patent protection is not needed for softwareinventions due to cumulative innovation nature of software. A large number ofsoftware inventions are sequential and iterative improvements of preexistinginventive ideas and software codes. Therefore, the incremental improvementcharacteristic of software invention process can suppress and limit thewidespread use of the software inventions without infringing the exclusiverights.Ref. Peter Menell, „Tailoring Legal Protection for Computer Software,‟ 39 Stan.L. Rev. 1329 (1987).
  8. 8. ©2013 TechIPm, LLC All Rights Reserved 84. Abstract Nature of Software PatentsThe abstract nature can be refracted in the claim terms. Vague claim termsmake it hard to interpret them correctly. Thus, one cannot know the exactboundaries of the invention. If one cannot know about the boundaries of therights, the right cannot provide a notice function anymore and lose theirproperty right characteristics.Ref. James Bessen & Michael Meurer, „Patent Failure: How judges,Bureaucrats, and Lawyers Put Innovations at Risk,‟ Princeton University Press(2008).
  9. 9. ©2013 TechIPm, LLC All Rights Reserved 95. Another Problem of Software PatentsDue to cumulative innovation nature of software inventions, a product could becovered by many similar inventions with overlapping claims. This kind of patentthickets can cause patent holdup problems: a patentee with a software patentonly cover a small port of the whole product can collect royalties far exceed thereasonable royalties by using the lawsuit threat in the court.Ref. Makr Lemley & Carl Shapiro, „Patent Holdup and Royalty Stacking,‟ 85Tex. L. Rev. 1991 (2007).
  10. 10. ©2013 TechIPm, LLC All Rights Reserved 106. Fixing Problems of Software PatentsA. Improving Patent NoticeThe first option to cure the vague claim terms is to apply stricter standard ofindefiniteness specified in section 112 second paragraph of the Patent Act, 35U.S.C during the prosecution or post-grant review processes in the USPTO.The second option is the tightening for the allowance of functional claims.The third option to cure the vague claim terms is to adopt an improved methodto interpret patent claims in the courts.Ref. Mark Lemley & Dan Burk, „Policy Levers in Patent Law,‟ 89 Virginia L. Rev.1575 (2003).B. Mitigating Patent Litigation ProblemThe first option to mitigate the patent litigation problem with the softwarepatents is to reduce the length of the patent term for software inventions.
  11. 11. ©2013 TechIPm, LLC All Rights Reserved 116. Fixing Problems of Software Patents -2The second option to mitigate the patent litigation problem with the softwarepatents is to adopt stronger requirements for software patent patentability inUSPTO.The third option to mitigate the patent litigation problem with the softwarepatents is for courts to adopt several discretional measures. One example isto shift legal costs to a party brought frivolous patent litigation.(e.g. Make Patent Trolls Pay in Court: Elimination of Software PatentsAn extreme measure to cure the current patent system for the softwareinventions is to abolish the software patent system entirely.Ref. Michele Boldrin & David Levine, „The Case Against Patents,‟Federal Reserve Bank of St. Louis Working Paper 2012-035A,(; last visited Nov. 10, 2012)
  12. 12. ©2013 TechIPm, LLC All Rights Reserved 12Thank you!• If you have any questionsplease contact Dr. Alex G. Leeat
  13. 13. ©2013 TechIPm, LLC All Rights Reserved 13TechIPm, LLC is a professional research and consulting company specializing intechnology and intellectual property mining and management.Technology Expertise• Mobile Computing & Wireless Communications Technology: LTE, UMTS,WLAN, WPAN, RFID, NFC, WSN, Cognitive Radio/SDR, M2M, Mobile TV etc.• Smartphone Applications: Location Base Services/Indoor Navigations, MobilePayments, Augmented Reality, Wireless/Mobile UI/UX etc.IP Expertise• Patent Analysis: Patentability, Freedom-to-Operate, Infringement, ValidityAnalysis, Patent Mining for Strategic Planning• Strategic Patent Evaluation & Valuation: M&A Patent Due Diligence,Acquisition Feasibility Analysis, Investment Valuation• Patent Portfolio Analysis & Development: Design Around Strategy,Essentiality & Claim Development for Standard Essential Patents• Patent Litigation Strategy: Evidence of Use, Claim Construction Strategy• Patent Prosecution: U.S. Provisional Filing, U.S. Non-provisional Prosecution,International Prosecution (PCT and Foreign Offices)• Patent Business Strategy: Licensing/Monetization Strategy, IP IntelligenceCompany Overview
  14. 14. ©2013 TechIPm, LLC All Rights Reserved 14Major ClientsTechnology management professionals planning, developing, andinvesting in new technologies/products/services.In-house IP counsels developing patent strategy.Licensing professionals looking for a new licensing opportunities.High-tech investment management firms.IP management consulting firms.
  15. 15. ©2013 TechIPm, LLC All Rights Reserved 154G LTE Standard Essential Patent CandidatesData 2Q 2013LTE Standard Essential Patent Candidates Data 2Q 2013 is a product based onLTE patents research for US market leader among LTE UE (cellular phones,smart phones, PDAs, mobile PCs, etc.) and base station (eNB) productmanufactures. LTE Essential Patent Candidates Data provides MS excel file forassignee, patent (publication) number, prosecution status for publishedapplications, related 3GPP TS36 Release 10 specifications, and the keytechnology components for an implementation of the products.
  16. 16. ©2013 TechIPm, LLC All Rights Reserved 16References