New patent laws “drastically undermine” holders’ rights, says Qualcomm counsel

Katy Oglethorpe

26 March 2014

US patent reform legislation was arrived at without proper consensus and overshoots the mark in regulating the enforceability of patent violations, says Qualcomm’s vice president and counsel.

Speaking at GCR Live: IP and Antitrust in Washington, DC, Laurie Self criticised legislation devised by Congress that aims to prevent dubious patent infringement litigation claims by so-called patent trolls.

Self said the proposed changes, which make it harder to sue for alleged patent infringements, were arrived at without negotiation with patent holders but was instead born out of a consensus among politicians of the need to solve “the troll problem”. Ultimately, she said, it’s a “perfect example of egregious behaviour creating hysteria”.

“The solution offered by Congress is far broader than the reported problem”, she said. It "drastically undermines the enforceability of patent rights writ large,” rather than simply addressing frivolous or vexatious litigation.

Meanwhile, further patent reform making its way through the Senate is the outcome of an “equally rushed process,” said Self. “Not a single member of the House or Senate fully understands the implications of the bill they are about to pass,” she added.

At the state level, too, around 25 patent enforceability bills “under the guise of consumer protection bills” are speeding through to legislation.

She said the move towards preventing patent litigation was a troubling trend, especially for small players. Ultimately, this threatens innovation, and does little to protect the ‘mom and pop’ outlets that it pertains to, she said.

“When we clamp down on patent rights we really have to worry about impact on [the] early stage of innovation technology,” she said, pointing to ancedotal evidence that suggests venture capitalists are moving money towards technologies that are not patent intensive.

Self was part of a panel discussing how changes in patent law and remedies may affect business decisions and investment. Panel chair David Kappos, at Cravath Swaine & Moore, said those trying to reduce standard essential patent litigation are taking a “cavalier view” of the impact of new antitrust doctrines.

Their actions were based on “100 per cent speculation” about concepts like hold-up and stacking, which had not been proved to exist in significant proportions. Changing the law  “dangerously ignores the risk of over-correction,” he said.

“Success and failures happen in the margins. When you shift the margin slightly you can cause legitimate actors to move away and do different things – a small change can cause a big decrease in investment and innovation.”

Ron Katznelson, president of Bi-Level Technologies, spoke about the America Invents Act (AIA) – a federal statute signed into law by President Obama in 2011.

Katznelson said that while the AIA was designed to reduce patent litigation, statistical evidence showed that these lawsuits as a proportion of overall civil litigation had actually risen since the AIA was introduced. This, he said, was due to numerous factors, including the fact that the act limits the joinder of multiple defendants in a single claim, meaning lawsuits have to be filed separately.

As a whole, the AIA “dangerously singles out” patent infringement actions for special treatment among civil cases, said Katznelson, “stripping district court judges of their judicial independence and discretion in applying their case management tools”.

Congress ought to conduct a thorough study of the AIA’s effects, and should correct any problems before imposing more sweeping legislation, he said.

Dina Kallay, direction of IP and competition at Ericsson, said that, if continued, the current trend towards standard-essential patents would cause companies like hers to re-evaluate their involvement in the standard-setting process.

“Standard setting is a money-losing activity,” she said, and without adequate compensation standards will be weakened and competition reduced, it will be the future “mobile phone-maker in his garage,” who face difficulty entering the mrket.

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