Many major technology companies such as Apple, Hewlett-Packard, Samsung and Dell have been bombarded with lawsuits on the grounds of patent infringement. Patent holding firms, or “patent trolls,” accumulate and bundle together portfolios of patents and then sue major companies for patent infringement. These patent trolls then make a quick buck off licensing fees and damages and force companies to take on costly lawsuits to protect their products. Sometimes businesses are sued without even knowing the owner of the patent. Businesses are put at a disadvantage as patent trolls exploit loopholes in the system.
Rep. Ted Deutch’s (D–Fla.) End Anonymous Patents Act was introduced and passed in an effort to combat patent trolling activities and put a stop to some of its inflictions upon businesses, such as discouraging future inventions, and it would strengthen the patent system. With the introduction and enforcement of the EAPA, there will be tightened regulation in place and inventors and small businesses will be free from the grip of patent trolls who are currently abusing the patent system for personal gain.
The customer-suit exception is one part of the EAPA that is invoked as an exception to the First-Filed rule, which allows a federal district court to decide what to do with a complaint when there’s already a similar complaint set as a precedent in court. Customer-suit exception allows a later filed case against or by the manufacturer to take precedent over the earlier filed case. Since the manufacturer must protect customers in order to avoid rulings against its products, the manufacturer is technically the “true defendant in a case.” Compared to an individual customer, a manufacturer has a stronger interest in defending on the grounds of minimizing litigation cost than they do for litigating merits of the case. The greater influence the manufacturer has is salient to business’s long-term growth. Thus, it’s in the favor of the business being sued to be able to turn to the customer-suit exception for legal assistance.
By demanding letters and litigation, the EAPA would also make the U.S. Patent and Trademark Office keep records of patents and be informed of real-party-in-interest information. Increased transparency would help to reduce the defendant’s litigation cost by eliminating the real owner of the patent’s anonymity. In addition, a user-friendly webpage would be made available for the public to access basic patent data recorded at PTO. The freer flow of basic information shall increase transparency and make it more efficient for both the general public and businesses to make evaluations and judgments.
The EAPA and its enforcement would save small companies and businesses from being ripped off by patent trolls. With ample information resources, companies would be able to protect their products and services by analyzing and comparing patent-holding firms before deciding to do business with them. This is the age of information. To a trader, having information about a stock allows for more precise prediction. In the case of patents, having information about patent-holding firms and patent records collected by PTO allows for higher transparency and better protection, which in turn encourages more proprietary inventions.
In response to the increase in patent abuse cases, the EAPA was introduced and implemented to restore and reinforce the dignified freedom that was key to nurturing new inventions and new ideas. The customer-suit exception will allow manufacturers to take a legal stance in the best interests of the business as the true defendant in court. With more transparency and information resources, there will be reduced litigation costs and businesses will be more effectively protected from patent trolls. The End Anonymous Patents Act will be a big part of the solution to strengthen the patent system and encourage business inventions.
Kevin Tung is an LSA senior.