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Patent trolls: Congress gets down to business

Steven Titch | Feb. 11, 2015
White Castle might not be the first company that comes to mind when high tech is mentioned, but the restaurant chain found itself in the middle of the patent troll controversy when it started sending menu updates from its headquarters to digital screens in restaurants around the country.

Transformer trolls: Well-known brands that shift their business models to focus on extracting revenues from their war chests of patents. One example is Nokia, once the most successful mobile technology manufacturer. Although it sold its handset manufacturing operations to Microsoft in 2014, it retained most of its patent portfolio. Its CEO made no secret of the company's patent assertion and aggressive licensing demands, as the core of its business model evolved away from producing anything. Though the word "troll" may conjure a more iniquitous image, the reality is that patent assertion is a lucrative practice that offers new revenues to companies of diminished manufacturing relevancy.

Foreign government-sponsored patent trolls: Think a small company's cease-and-desist letter will have a chilling effect on innovation? Wait until you get one from the People's Republic of China. Beijing has backed China's Ruichuan IPR Funds with $50 billion to acquire patents that will be used in actions against U.S. companies. It's not just China; South Korea, Taiwan, Japan and France have all formed state-sponsored PAEs as well. It's the latest form of government subsidies to their native private companies by providing them a boost in the global market. As negotiations continue on the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP), two major international trade agreements that stand to set new rules for global trade between the U.S. and Europe and the U.S. and Asia for years to come, stakeholders should consider including binding oversight on the issue.

In addressing these varied threats, patent reform will require a bipartisan, multilateral effort across several federal agencies, including the USPTO and the U.S. Commerce Department. It's heartening to see that the White House and congressional leadership have signed on. Goodlatte's bill is a good place to start.


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