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Sunday, January 26, 2020

Study shows IP abuses threaten innovation, end up costing consumers

By Jessica M. Karmasek | Feb 13, 2015


CHICAGO (Legal Newsline) - A new study on intellectual property abuses has found that so-called “patent trolls” are hurting the U.S. economy in more ways than one.


The Heartland Institute, in a study released Tuesday, shows that trolls and other abusers of the patent system end up interfering with market competition and impeding entrepreneurs and innovators. In return, consumers see higher prices and fewer of the products and features they want.


Steven Titch, a policy advisor at Heartland and author of the policy brief, “Why Patent Reforms are Needed: Intellectual Property Abuses Threaten Innovation, Cost Consumers Billions,” notes that much of the current patent reform debate centers on how to make patent defense easier and less onerous for defendants without undermining legitimate patent claimants.


He points out that the solution must not unfairly classify certain patent holders, such as universities, as trolls simply because they hold patents without manufacturing goods.


Generally speaking, a non-practicing entity, patent assertion entity or patent monetization entity purchases groups of patents without an intent to market or develop a product.


In some cases, but not all, the entity then targets other businesses with lawsuits alleging infringement of the patents it bought. Often, these are referred to as “patent trolls.”


But Titch contends that a careful balance of interests is achievable.


“Patent reform presents a great opportunity for bipartisan action,” he said. “Patent trolls have cost U.S. businesses $80 billion. This won’t stop until Congress and the White House make it tougher for patent assertion entities to press infringement cases based on generalities and vague language.”


Titch says sound policy will strengthen the U.S. Patent and Trademark Office’s ability to evaluate the quality of patent applications and the scope of technology they cover.


“Congress can help by creating a structure that penalizes frivolous lawsuits, such as ‘loser-pays’ provisions,” he said. “These will weed out trolls but protect plaintiffs with legitimate complaints.”


The study’s specific recommendations for reform include:


- Federal legislation that would empower the PTO to better address the changing nature of patents, particularly regarding software. The office, the study notes, needs to better understand methodologies and mechanisms in the way software is written;


- The White House, through the U.S. Commerce Department and U.S. Trade Representative’s Office, should use the Transatlantic Trade and Investment Partnership and the Trans-Pacific Partnership negotiations to address the growing problem of state-sponsored patent trolling; and


- Regulatory bodies that set standards necessary for the interoperability of devices, such as the Federal Communications Commission, should avoid heavy reliance on patented technology. The study contends these decisions result in a government-mandated monopoly that leads to overpricing of licenses.


To read the full paper, click here.


The Heartland Institute, headquartered in Chicago, is a national nonprofit that aims to find, develop and promote free-market solutions to social and economic problems.


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Heartland Institute