“We are working on a bipartisan basis to craft legislation to address this problem of abusive practices and restore confidence in the American patent system.”
These bold words, from the pens of Democratic Sen. Patrick Leahy of Vermont and Republican Sen. Mike Lee of Utah, represent the strong—and bipartisan—stance that the federal government is taking on the issue of patent reform.
Differing views on AIA
One of the most important pieces of federal legislation in this area in decades is the Leahy-Smith America Invents Act (AIA), which was intended to serve as a sweeping reform for the patent system. But experts are sharply divided on its efficacy, citing certain sections of the law as more potent than others.
Trolling for trouble?
Finally, there are certain financial investors who use the M&A tactic as an investment strategy. This brings to mind the name that many parties use to describe these companies that amass IP and then threaten litigation: “patent trolls.”
Bernard Nash, partner and practice leader of the State Attorney General Practice at Dickstein Shapiro, says that the issue is complex, and assigning names to these groups is a way to simplify matters and make a point. “Those who see problems in this area characterize it as patent trolls, a pejorative term. One faction that state attorneys general are thinking about are properly called patent trolls, the lowest of the low. Ones that threaten and lie and cheat small business owners who are not sophisticated, who make things up and put it in threatening letters. If it were that simple, you would not need federal legislation. You’d go after crooks who abuse people, the scam artists.”
But alongside these trolls, says Nash, is what he refers to as “real” NPEs, which he distinguishes from trolls by their behavior. “Real NPEs spend a lot of money buying up portfolios and monetizing an investment—intellectual property,” he says, noting that these companies are interested in getting a return on their investments, usually through licensing. Nash, an expert in the strategies that state attorneys general have been using to combat trolls, states that attorneys general are not interested in getting involved with these types of NPEs, focusing instead on companies engaged in criminal behavior.