The “
patent troll” – a person or company that acquires and enforces patents in hopes of generating revenue from legal settlements, rather than from marketing the patented invention – has become far more than just an annoying and dimwitted wart-nosed creature lurking under a bridge and demanding a toll to cross. He has become a driver of patent law reformation, an impediment to economic growth, and a force to be reckoned with in a variety of industries. A
new study released by Boston University highlights these facts. Further, the results of this study show a disparity between the way patent trolls affect two of the leading industries lobbying for patent law reforms, and lend credence to the small but growing call for a bifurcated patent system that would treat the computer/software industry separately from other industries, particularly the biotechnology industry.
The most appalling result
reported in the study relates to the estimated economic costs of patent trolls. “Patent trolls … have cost publicly traded defendants $500 billion since 1990. And the problem has become most severe in recent years. In the last four years, the costs have averaged $83 billion per year.” These estimated costs are so large that they have driven the patent reform lobbying movement inf the IT sector for years. Trolls take advantage of the fact that it’s far easier to predict and enable a forward-thinking patent application in the IT sector than it is in biotech or pharmaceuticals – industries where the patent office has moved further and further towards requiring significant proof of concept data to get a patent issued, the kind of data that is expensive to generate and stands as an almost-absolute barrier to troll-like behavior.
That contention is borne out in the BU study by analysis of the lawsuits filed by trolls: “Software patents accounted for about 62% of the lawsuits. In contrast, only 2% of the lawsuits involved drug or chemical patents.” As a result, software and computer patent lobbyists focus on making it harder to receive patents and on supporting multiple opportunities to challenge patents early after issuance; these lobbyists are generally unconcerned with longevity or strength of patents, since most IT products have a very short shelf life, far shorter than the term of patent protection available to them.
In contrast to these positions, the biotech-pharma world is focused on recovery of strong patent term on the backside of a patent’s life, to protect products that have very long and expensive development paths – for instance, the average cost to develop a single drug (after factoring in all the failures that are part of the drug development process) is now over $1B, with an 8-12 year development path that often reduces drug's patent protection by patent by more than 50%. To thrive, the biotech and pharma sectors need a strong presumption of patent validity, longer patent life, difficult and limited patent challenge rules, and (ideally) a more relaxed stance from both the USPTO and the FDA, to allow more patents to issue and drugs to be approved more quickly so as to enjoy sufficient patent protection. These needs are not unique to the biotech and pharma sectors, but they are often best championed by these sectors, which (unlike most other industrial fields) lose significant patent life due to regulatory hurdles.
Patent trolls help drive this stark disparity: if trolls didn’t have such power, if they weren’t costing so much to innovators, it is entirely possible the software and computer industry would find itself more aligned with biotech and pharma on patent reform priorities. Unfortunately, given their different vulnerabilities to troll-like behavior, such a world is unlikely – neither industry is likely to be comfortable with a patent system that is beneficial to the other, and a system that tries to split the difference ends up woefully inadequate for both industries.
Meanwhile, the question of whether software should even be patented is not new, and continues to
see action at the Supreme Court level. Rather than addressing whether software is patentable under the laws as written, it would be more beneficial to focus on whether software and other short-lived products that don’t require long term patent protection (and which can be easily prophesized by trolls) should be included in the same system used by industries that thrive with patents that protect their products for as long as possible.
A possible, though politically perilous solution, would be a bifurcation of the patent system, allowing software patents to exist in a different setting with rules that will deter or even eliminate the threat of trolls, and with regulations and policies that create a system that is exclusively designed for the acquisition and enforcement of software patents. There is no formal movement at this time to create such a monumental change to the U.S. patent laws, and in light of the long-overdue and finally successful patent reform achieved
earlier this year, the timing may not be right to ask Congress to go back to the drawing board yet again. That said, it’s clear that trolls are a drag on the U.S. economy, and at a time when the economy continues to sputter and misfire, any opportunity to provide a kickstart should be considered. A good first step would be a study of the feasibility of splitting the patent system so that all of the industries relying on it can best take advantage of their patents.
David Poticha is a senior licensing manager in TTO's University of Colorado Denver | Anschutz Medical Campus office.
