Lost in the haze of New Year’s Resolutions and wall-to-wall election coverage, a very disturbing fact for America’s inventors emerged early this month: The number of lawsuits filed by non-practicing entities (NPEs), more properly known as “patent trolls,” increased by 25 percent in 2015. As a quick reminder for those who might not have followed the issue yet, patent trolls are companies that exist solely to extort money for (often comically vague and totally unused) patents, at the expense of actual inventors and small businesses.
Indeed, patent abuse in general had a pretty strong year in 2015, with its poster boy probably being Martin Shkreli, the infamously extortionate hedge fund manager who jacked up the price of the drug Daraprim by over 5000 percent simply because he owned the (expired) patent for it. Shkreli, fortunately, was quickly outcompeted by generic drug manufacturers, who took advantage of the patent’s expiration, but not everyone was so easily saved from patent profiteers.
In short, if lawyers are unpopular as a rule, then patent law became a leading cause of their unpopularity in 2015, and with good reason. Ironically, even politicians, whose popularity seems to rank somewhere between Justin Bieber and the Black Plague these days, have sounded alarms about the system. Politicians as diverse as Senate Majority Whip John Cornyn (R-TX), Senate Democratic Conference Vice Chair Chuck Schumer (D-NY), Sen. Mike Lee (R-UT), and even Speaker Paul Ryan (R-WI) have all voiced support for reform. Yet, mysteriously, the one bill that actually has a chance of becoming law — the Innovation Act — has been mired in negotiations. Big Pharma, in particular, apparently unchastened by the example set by Shkreli, have held the bill up with pleas for utterly unnecessary and damaging carve-outs in the patent system. So, for that matter, has the Star Chamber-esque East Texas District Court, whose absurdly unfair methods of adjudicating cases act as muscle for trolls.
These vile, corporate welfare guzzling gluttons have been aided and abetted by dishonest and nonsensical arguments, sometimes even made (unfortunately) by self-described conservatives. And while the 2015 spike in lawsuits is disastrous news from an economic standpoint, the one silver lining to its exposure of this cloud of patent-holding locusts is that it has finally put one of the most ridiculous anti-reform arguments to bed. That argument, which has been made by any number of people trying to gull the uninformed with seemingly anti-Washington sentiment, runs something like this:
“Why do we need to have Congress pass a bloated reform bill to solve this problem? Surely the courts can do it more surgically and deliberately. I mean, come on, the Supreme Court already clamped down on patent litigation in Alice Corp v. CLS Bank! Let’s wait and see if that does any good, okay?”
Well, we’ve waited, and now, we’ve seen. I quote from the Wall Street Journal article on the spike in lawsuits:
In a 2014 case called Alice Corp. v. CLS Bank International, the U.S. Supreme Court struck down a patent for software that reduces risk in financial transactions. Since then, lower courts have struck down dozens of software patents as invalid, disarming many NPEs who had used such patents in lawsuits against many large tech companies.
According to RPX, which helps companies reduce their exposure to patent lawsuits, “this combination of factors might have seemed insurmountable to NPEs; yet clearly, these and other defendant-friendly developments failed to slow the overall rate of lawsuit filings in 2015.”
In other words, trying to stop the patent troll craze with incremental court filings has worked about as well as trying to stop a hurricane with levees made of cardboard. And for anyone who actually bothers to pay attention to the actual structure of the patent system, the reason is obvious: the system is broken enough that it needs more than just judicial tinkering around the edges. It needs an overhaul, patent trolls, Big Pharma, research universities, and the other corporate welfare queens be damned.
Hopefully, if 2016 sees anything on the legislative calendar before election season truly begins in earnest, it will see just such a set of revisions passed into law. It’s time we had a patent system designed by those who care more about the rule of law than about protecting liberal special interests like the architects of Obamacare and the inventors of trigger warnings. Here’s hoping that, with the numbers in on lawsuits from 2015, lawmakers will finally have the guts to give us just that.