From Congress to the USPTO, there's an assumption that only patent plaintiffs abuse the system; but it's wrong

In the ongoing debate around patent reform in the US there are two distinct narratives at play. The first is well known to anyone that has even only occasionally followed the progress of the proposed legislation.  

It is the claim championed by Big Tech that they are regularly sued by patent owners they have never heard of, on patents they have never come across or seem to have little relevance to their products. This, of course, is the narrative that has come to dominate the current push for change. BJ Watrous, Apple’s chief IP counsel, raised it at our recent IPBC Global event in San Francisco. Given that the Cupertino-based giant is the most sued company for patent infringement, his views understandably get a lot of traction. 

But there is another side to this story; though it is less frequently heard: that far too many licensing approaches to far too many companies (and yes, they’re often in high tech) are met with a closed door, forcing the patent owner (and yes they’re often an NPE) to litigate. Fatih Ozluturk of Soryn IP Group, writing in this blog at the end of last year, labelled the alleged infringers who engage in this behaviour as the “patent ogres” of the market.

More than anything these duelling narratives point to a licensing market which, if not completely broken, may no longer be fit for purpose.

It was interesting to think of this dichotomy as USPTO Director Michelle Lee gave a speech earlier this week in Washington DC. Talking about the current state of patent reform, Lee referred to lessons she learned during her time working in the corporate world (as she often does during her speeches). “I can tell you from my experience in the private sector, litigating patent cases is very expensive. Defending against an infringement suit can cost, on average, depending upon a variety of factors, from $3 to $5 million,” she stated at one point.

Before joining the USPTO, of course, Lee was Google’s first head of patents and patent strategy. In that position she will certainly have had experience of the challenges and costs of being a defendant. But what she had less experience of at Google, though, was working at a company whose patents had been infringed by another entity. Google did not launch its first patent infringement suit until 2013, long after she had left.

In her speeches on reform, Lee is careful to call for strong patent protections to protect innovation, but as with many in this debate (including most of Congress) her focus is overwhelmingly on a broken litigation system seen from the perspective of a defendant. Indeed, if you look at the USPTO website, you will find information on what to do if you have “Been Sued or Gotten a Demand Letter”, but you will struggle to find anything that provides advice on your options if your patent has been infringed and the infringer is refusing to discuss your concerns or to talk about negotiating a licensing deal. The implication seems to be that patent litigation abuse is a one way street and that the only bad guys are plaintiffs. Issues affecting licensors – actual or potential – are of far less concern.

Perhaps that’s not surprising. The data around litigation is readily available; we know how much cases cost and it’s easy to keep an eye on the number of new ones being filed each month. By contrast, much of the licensing market remains private; there is no way of knowing how many deals are being done, how much they are worth or how they originated. But as we saw with the collapse of IPXI, a licensing approach that doesn’t come with the very real threat of litigation is going to struggle to succeed.

It’s this perspective that has been almost wholly lacking from the reform debate; and it’s a hole that is very clear when you examine the lists of witnesses various House and Senate committees have called to discuss the issues during hearings. But making sure that both sides of the reform narrative are given equal weight would certainly help balance any legislation that ultimately reaches the President’s desk and would probably make it much better. Sadly, the chances of that happening get slimmer by the day.