Out of Balance

Read a PDF of the full article with sidebars and graphics.

In a sense, the patent system is a victim of its own success. As intellectual property moved from the periphery to a central role in both corporations and the greater economy over recent decades, it attracted increasing attention and capital. But big growth inevitably leads to new problems.

On the other hand, critics complain that many of the patents the PTO eventually grants are of poor quality. That's a recipe for long, expensive litigation because courts and juries can be loath to challenge validity.

"There are district courts where it's very difficult to get any sort of summary determination that the patent is invalid," says McFall, who previously was head of IP litigation at Yahoo. "You usually have to wait until you get to trial and a lot of juries just don't like to overturn patents."

"That set off alarm bells across the country; that's a pretty restrictive test," says Bob Laurenson, an IP partner at Howrey. "That cuts out a lot of processes people thought would be patentable. Not just business methods but other processes as well."

Some medical diagnostics and wireless signal manipulation technologies, to cite a few, would not clear such a strict process patent threshold. Widespread concern led scores to file or collaborate on amicus briefs.

"Of my patent cases, if I tallied them up right now, all save two are classic, nonpracticing entity defense cases," says Michael Jacobs, co-chair of the IP group at Morrison & Foerster.

For NPEs it's a volume business--the more people you sue, the more you make. They bank on the simple fact that some defendants will just pay them to go away.

"We're looking at things like using retirees on a contract basis, or using lower cost associates on an in-placement basis--they sit in our office, but we pay a discounted hourly rate for buying in bulk," Trussell says. "We're also looking to lower-cost law firms than the traditional New York or D.C. law firms."

Companies are also being more selective about what they choose to patent and more attentive to the prosecution process itself.

Contributing Author

Steven Andersen

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.