Bill Takes Aim At Patent Lawsuit Stupidity > Holding companies are the problem....

The interesting thing is that most of us would agree on who a patent troll is if we posted the facts of a case. When you try to define it with precision, the troll can tweak a few settings to get to the other side of the demarkation point. It then takes years for Congress to regroup.

Congress has dealt with other similar problems by delegating the rulemaking authority to agencies to change the criteria to deal with adaptive system abusers. For example, designer drug laws allow the DEA to ban new drugs that have certain properties even though they are not listed by name. This stops drug dealers from creating slight variations in drugs to slide around the rules. Similarly, the IRS can do this with tax structures. When people suggested a similar proposal to deal with assault weapons, people went ballistic.

If you look at many of these patent trolls, they operate out of offices the size of a shoebox (rarely a mailbox), in the Eastern District of Texas, are fully owned by lawyers who make their living representing these corporations. Since corporations are separate legal entities, they can collect attorney fees. (Someone representing themselves cannot).

My thoughts are as follows:

*We stop the trolls from getting attorney fees from the other side by allowing the court to peer through the structure and make an economic reality based test whether the lawyer and the business are largely overlapping;

*We create a special patent/copyright enforcement court that is designed for virtual litigation (appearance by teleconference, fasttracked discovery), etc.;

*We create a fast tracked first stage of litigation with limited discovery (to stop abusive discovery aimed at burdening the defendant);

*We allow damages to mitigated by proof that the infringment was untintentional and the product of good faith patent research. If the infringment is unintentional, we can offset the damages by proof of what the cost and reduced sales would be to go forward with alternate non-infringing technology. For example, Samsung quickly reworked their phones to deal with some of Apple's patent claims. In a judgment issued for an infringement, the jury should be asked to determine how many more phones would have been sold because of the infringing similarity than if the product had come to market with the non-infring interface;

*If the infringment is innocent (see above), compulsory licenses can be calculated with reference to industry standard fees with some multiplier, e.g. no more than 2.5 times what the factfinder believes comparable licenses were granted for;

Special rules should be put in place for probable trolls. I believe that the Justice Department or the Patent Office should be empowered to promulgate rules defining the ever changing characteristics of a troll and that Congress should identify the criteria with a broad brush. Trolls could further be limited to only collecting X times what they originally paid for the patent.