There has been a lot of talk about patent reform efforts in the Senate. Those efforts are important and you (yes, you) should write your Senator to support reform. But here at Public Knowledge, we like to keep tabs on all the goings-on in the world of patents, and that includes a couple of ideas being floated at the Patent Office.
Not surprisingly, given that Congress, the White House, the Supreme Court, and the FTC are all interested in fixing the patent system, the Patent Office is involved as well. To find the best ideas for improving patents, they issued several requests for comments on two subjects: crowdsourcing prior art, and identifying owners of patents.
This idea comes out of the problem of patent trolls using shell companies to hide their identities. If you follow patent troll stories (and who wouldn’t?), then you’ve probably heard about this. The radio show This American Life did a story about ghost patent owners in abandoned offices in Texas. MPHJ set up the infamous patent troll to hide its identity while it was going off threatening individuals and small businesses. The point of these shenanigans is to make it hard for small companies, threatened with a patent lawsuit, to figure out what’s going on and actually defend themselves. So it’s only natural that the Patent Office wants to stop that.
In the comments we filed with the Patent Office, we point out that these commendable efforts to reveal the true owners of patents are actually not unique to the patent system. There are plenty of places where knowing who owns what is really important, and not knowing who owns what has led to disasters.
One of the best examples of such a disaster: the 2008 financial crisis. When Lehman Brothers collapsed and declared bankruptcy, it took $613 billion in debt down with it. On the other end of those debts were companies all across the globe—but which ones? There is no standard for identifying companies, and it was common practice to use holding companies or other corporate schemes to conduct financial transactions. So no one could tell how much money Lehman Brothers owed them—that is, how much money they stood to lose from the bankruptcy. A major financial event, combined with a lack of information about ownership, created a catastrophe that would affect the industry for years to come.
If you think about it, this is similar to what happens when a patent troll starts suing a lot of companies. Consider the scanner troll MPHJ again. You have a big patent event—MPHJ starts a major patent assertion campaign—combined with a lack of ownership information—no one knows who actually owns the patent—to create incredible fear and confusion among businesses and people.
The worst of patent trolls are a lot like the worst of the financial industry, in many ways. Both of them make their money off of complex, questionable assets: vague patents on the one hand, derivatives on the other. They both tend to target small, weak entities without much concern for the merits of their cases: patent trolls go after small startups and businesses; banks robo-sign foreclosures on mortgages. And, for both of them, it’s difficult to see how their existence benefits the public besides just pouring money into a few people’s pockets. Sure, the financial barons say they are facilitating efficient markets, and the patent trolls say they are helping inventors get a cut, but does that really justify the hundred-million-dollar bonuses, or the hundred-million-dollar patent lawsuits?
What is worrying is that, as patent assertion becomes big business, the patent trolls become a more powerful force in making policy. They set up shop in DC and hire lobbyists. They find academics to speak on their behalf. They cite to universities and small inventors, saying to Congress, “you must protect us in order to protect them.” In a very real sense, as patent trolls grow in size, they grow in strength—they become too big to fail.
And whose voice can stop them? Yours.
All policymakers need to hear that voice that demands freedom, the voice that wants the latest and greatest technologies, the voice that wants to protect small innovators (the voice that is small innovators). Right now this is the Senate, but in the long game it’s every branch and every part of government. If all they hear from are patent trolls and big companies, then that’s all they will know to care about. So make sure that your voice is in that arena.
I’ll even make it easy for you.
Image credit: Aaron Bauer