Inspired by a groundswell of public outrage against a recent spate of egregious patent enforcement targeting small businesses, five patent reform bills have been proposed in the last four months. All five 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.
Brian Love and James E. Bessen,
Make the Patent 'Polluters' Pay: Using Pigovian Fees to Curb Patent Abuse
Available at: http://digitalcommons.law.scu.edu/facpubs/770