Patent 'trolls' are elusive, experts say

A U.S. House of Representatives subcommittee, seeking to reduce legal claims by owners of illegitimate patents, heard Thursday that it's difficult to define just what is a bogus patent claim.

The goal of Thursday's hearing, said subcommittee Chairman Lamar Smith, was to define so-called patent trolls, which some patent-reform advocates say are those who own patents solely for the purpose of collecting license fees or suing alleged infringers.

"The patent system should reward creativity, not legal gamesmanship," said Smith, a Texas Republican and sponsor of patent overhaul legislation called the Patent Reform Act. Smith's wide-ranging bill would limit damages in some patent cases, allow a new patent challenge mechanism and allow third parties to submit evidence that a patent application contains someone else's invention.

But four witnesses, including Segway scooter inventor Dean Kamen, told the House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property that defining who exactly is a patent troll become complicated in the details. Some people have defined patent trolls as patent holders who don't develop their inventions, and Kamen's firm pitches its patents to a larger company to develop the products, he said.

"I only recently found out, after reading the definition of a troll, that I am one," said Kamen, whose DEKA Research and Development Corp. has invented several medical products. "It's maybe a little bit unfair and dangerous to characterize people who license products as trolls."

Kamen questioned the committee's efforts to limit the patent infringement lawsuits. He and other inventors have said lawsuits are one of the few protections small inventors have against large companies stealing their patents.

The U.S. Supreme Court in May ruled that judges should not automatically enforce injunctions against companies found to infringe patents, but if patent holders don't have exclusive rights to determine what happens to their patents, then the value of patents is limited, Kamen said.

"When I walk into that large company, they've got marketing, they've got distribution," he said. "If I show them what I've got, the only thing I have on my side of the table is that patent. The only way to get them to commit huge resources to turn that into the product, is to say to them, 'You exclusively have the right to do this.'"

Other witnesses agreed that labeling some people as patent trolls would be less effective than defining actions that Congress should prohibit. Congress should focus on identifying bad behavior, "whoever engages in it," said Ed Reines, a patent lawyer with Weil, Gotshal & Manges LLP.

But representatives of Amazon.com Inc. and Time Warner Inc. called on Congress to rebalance patent rights between patent holders and patent users.

Congress should limit the number of court venues in which patent infringement lawsuits can be filed, and it should limit the damages in cases where the patent holders aren't practicing the patent, said Chuck Fish, Time Warner's vice president and chief patent counsel.

It's too easy for some patent holders to get damages for lost profits, even when they don't compete with the company they've sued for patent infringement, added Paul Misener, Amazon.com's vice president for public policy.

The overriding problem is the U.S. Patent and Trademark Office issuing bad patents, Fish said. He praised the subcommittee for looking at ways to improve the patent-issuing process.

Current patent law is also "not balanced," Fish said. "There is a harmful trend that exists toward speculation and litigation based on patents, and away from product innovation that is supported by strong intellectual property rights."