Brian J. Love

Make the Patent 'Polluters' Pay: Using Pigovian Fees to Curb Patent Abuse

On the heels of a widely reported uptick in egregious patent enforcement, six patent reform bills have been introduced in the last six months. All six bills aim to curb nuisance-value patent litigation, a phenomenon popularly referred to as “patent trolling,” by reducing the cost of defending these suits. In this essay, we argue that these bills, while admirable, treat the symptoms of our patent system’s ills, rather than the disease itself: a growing glut of unused high-tech patents that have little practical value apart from use as vehicles for nuisance-value litigation. Accordingly, we urge Congress to consider one additional legislative fix: reforms to the way patent renewal (or “maintenance”) fees are calculated. Combining our own empirical research on the timing and costs of patent troll litigation with the concept of “Pigovian” taxation, we propose a new patent fee structure designed to induce the expiration of trivial patents before they wind up in the hands of bad actors. Doing so, we explain, would drive trolls out of business while sparing legitimate innovators from the same fate.

An Empirical Look at the "Brokered" Market for Patents

We study five years of data on patents listed and sold in the quasi-public “brokered” market. Our data covers almost 39,000 assets, an estimated 80 percent of all patents and applications offered for sale by patent brokers between 2012 and 2016. We provide statistics on the size and composition of the brokered market, including the types of buyers and sellers who participate in the market, the types of patents listed and sold on the market, and how market conditions have changed over time. We conclude with an analysis of what our data can tell us about how to accurately value technology, the costs and benefits of patent monetization, and the brokered market’s ability to measure the impact of changes to patent law.

Litigation of Standards-Essential Patents in Europe: A Comparative Analysis

Despite the significance of patent litigation in the EU and the looming structural overhaul of the European patent litigation system, there has been comparatively little empirical or statistical analysis of European patent cases across member states. This absence has largely been due to the lack of harmonized case-level data across European jurisdictions. Over the past few years, however, researchers in Europe have developed patent litigation databases that have enabled robust quantitative analysis. As a result, comparative empirical studies have recently been published concerning European patent litigation overall, as well as litigation by so-called non-practicing entities (NPEs). The present study extends this work to the important area of litigation relating to standards-essential patents (SEPs) in the EU. We find that SEPs have been asserted in Europe at significant levels, and that PAEs play a large role in this activity.

Brief of Amici Curiae Law, Business, and Economics Scholars in Alice Corp. v. CLS Bank, No. 13-298

The Federal Circuit’s expansion of patentable subject matter in the 1990s led to a threefold increase in software patents, many of which contain abstract ideas merely tethered to a general-purpose computer. There is little evidence, however, to suggest this expansion has produced an increase in software innovation. The software industry was highly innovative in the decade immediately prior to this expansion, when the viability of software patentability was unclear and software patents were few. When surveyed, most software developers oppose software patenting, and, in practice, software innovators tend to rely on other tools to capture market share such as first-mover advantage, trade secrecy, copyright, goodwill, and economic network effects. If anything, the increase in software patenting has led to an increase in software litigation, which in turn has encouraged firms to acquire patents for strategic purposes unrelated to innovation, serving as either defensive stockpiles to deter legal threats or offensive leverage for rent-seeking patent assertion entities (PAEs).Moreover, abstract software patents do not function well within a property rights framework because they fail to define cognizable metes and bounds and fail to provide effective notice to third parties of when a particular practice or product might infringe. Due to their abstractness, these claims can often be construed to cover any of the particularized processes that result in the same outcome, including those never envisioned by the inventor. Accordingly, these metes and bounds are not concrete enough to be useful to those who wish to tread carefully around them. The mere application of the idea using general-purpose technological components, such as a general-purpose computer, does nothing to abate this problem. Similarly, abstract patents defy the attempts of software innovators, or general counsel at technology companies, to stay on notice of what is already protected. This leaves firms vulnerable to investing in software development with little to no assurance that they will be able to avoid infringing upon an abstract patent, even if they conduct diligent searches within patent databases. Again, this will be true even if there are general-purpose technological components tethered to the claims, as those components do nothing to help distinguish one abstract claim from another. Proliferation of such patents also contributes to the problem of patent thickets.A well-defined 35 U.S.C. § 101 ensures that abstract software patent claims and their attendant notice and patent thicket problems do not undermine the patent system and stymie innovation. It serves as a decisive gatekeeper that the Patent Office and trial courts can use early in administrative proceedings and litigation. Further, it avoids many of the systemic challenges prevalent with the use of 35 U.S.C. §§ 102, 103, and 112 in such cases – the speed of software innovation, the difficulty locating software prior art, and lax, broad claiming standards. Accordingly, this Court should affirm the invalidity of the patent claims at issue here and hold that abstract ideas in the form of software are unpatentable and that mere computer implementation of those ideas does not create patentability.* This brief was prepared with the help of NYU Law clinical students Megan Briskman, Philip Cernera, Ilyssa Coghlan, Rafael Reyeni, Peter Van Valkenburgh, and Shawn Soen under the supervision of Professor Jason Schultz.

Testimony of Brian J. Love, California Assembly Select Committee on High Technology, Informational Hearing on Patent Assertion Entities

The California Assembly Select Committee on High Technology held an informational hearing on patent assertion entities (PAEs) on October 30, 2013. This testimony explains what a PAE is, how PAEs change the economics of high-tech patent litigation, and why the PAE business model is problematic.