White House Issues Report on Patent Assertion and Innovation

On June 4, the Executive Office of the President issued a report entitled “Patent Assertion and U.S. Innovation.” The stated purpose of the report is to address challenges posted by “patent assertion entities” (PAEs), which the report defines as entities that”use patents primarily to obtain license fees rather than to support the development or transfer of technology.”

The report estimates that in the past two years, PAEs filed 62% of all patent infringement suits. It also cites to a “range of studies [that] have documented the cost of PAE activity,” but it provides no firm estimates of those costs, and it’s not clear whether those studies include the same definition of “patent  assertion entities” that the President’s report uses.

Concurrent with the report, the White House issued a set of legislative recommendations and executive actions to address the costs that PAEs impose on U.S. industry. The legislative recommendations include:

  • Legislation to require patent-plaintiffs to disclose the real party in interest in litigation;
  • Implementing a “loser pays” program in patent litigation; and
  • Expanding the USPTO’s “covered business method patents” program.

As noted in previous IP Spotlight posts, these recommendations are already pending in the SHIELD Act proposal and a bill recently introduced by Senator Charles Schumer.

The report’s executive action proposals include:

  • USPTO rulemaking to require patent applicants to keep their ownership information up to date, including the ultimate parent entity of the owner.  (As IP Watchdog astutely noted today, this proposal is already underway at the USPTO.)
  • Training USPTO examiners to more closely scrutinize “functional claims” in patent applications.
  • Expanding informational resources to businesses and patent litigation defendants.
  • Reviewing International Trade Commission procedures regarding exclusion orders.

Although the report will get a lot of press, its impact is not at all clear. The legislative recommendations and executive orders descriptions mostly summarize initiatives that are already underway, rather than propose any new actions. In addition, other than the “loser pays” proposal, none of the initiatives propose any changes to actual patent litigation or prosecution practice.

Nonetheless, the report is certainly designed to provoke a conversation. Whether that conversation will lead to any substantive change remains to be seen.

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