INVOKE PRINCIPAL, MR. VARUN A. SHAH

WORKING TO REFORM THE U.S. PATENT SYSTEM

In order to reduce abusive patent litigation initiated by patent trolls, the House of Representatives passed the Innovation Act which adds hurdles to asserting patent infringement claims. Although the Innovation Act passed the House with bilateral support, the Innovation Act was stalled in the Senate due to objections by companies in the pharmaceutical and biotech industries such as Johnson & Johnson, and companies in the high-tech industry whose patent assertion rights would be affected.

Mr. Shah proposed a modification to the Innovation Act (below) which aims to overcome these objections and more selectively target patent trolls. Mr. Shah has discussed his proposal with the Office of Rep. Goodlatte, the sponsor of the Innovation Act, and the Office of Senator Cornyn. Mr. Shah's proposal has been circulated in Congress.

PROPOSAL PUBLISHED:

PROPOSAL DISCUSSED:

Selectively Targeting the Patent Troll Problem

Proposal by Varun A. Shah

Article 1, Section 8, Clause 8 of the United States Constitution, known as the Copyright Clause, empowers the United States Congress:

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

The exclusive right to Writings forms the basis of U.S. Copyright law and the exclusive right to Discoveries forms the basis of U.S. Patent law.  It follows that U.S. Copyright law and U.S. Patent law must be drafted in accordance with the explicitly noted Constitutional goal of promoting the progress of Science and useful Arts. Any laws that result in demoting the progress of Science and useful Arts are not aligned with the Constitution.

Current U.S. patent law permits the transfer of these exclusive rights as an incentive to the original Authors and Inventors for promoting the progress of Science and useful Arts.  However, the transferability of these exclusive rights, without restriction or constraints, has created a patent ecosystem which often demotes the progress of Science and useful Arts. Specifically, transferability without any restrictions or control as permitted by current U.S. patent law has enabled patent trolls to obtain and maliciously use patents. Patent trolls initiate patent infringement lawsuits generally without any conclusive research as to whether a defendant actually infringes the patent. Patent trolls rely on the threat and the known high cost of litigation to extort settlement payments from many defendants. The defendants range from startups to highly successful Fortune 100 companies.

The results are catastrophic. Startups with their first round of seed funding are shut down due to litigation costs. Fortune 100 companies are forced to divert resources away from Research & Development that would directly promote the progress of Science and the useful Arts. As a participant and supporter of the U.S. patent system, I propose modifying U.S. patent law to recalibrate it to promote the progress of Science and useful Arts.  Specifically, I propose placing restrictions and control upon transfer of patents such that the rights of the original innovators are not affected. My proposal includes applying restrictions and control to patent infringement assertions unless the entity asserting the patent is one of:

1) The original inventor.

2) An employer of the inventor to whom the inventor was obligated to assign the patent to.

3) A college or university to whom the inventor was obligated to assign the patent to.

4) A third party who acquired the patent in the sale of an established line of business with a minimum annual revenue connected to the sales of goods and/or services.

Patent trolls do not generally acquire patents in a sale of an established line of business, but rather acquire patents alone for the purpose of asserting the patents. As a result, patent trolls do not fall into any of the above categories. This proposal targets patent trolls which are a burden on the U.S. patent system in favor of innovative companies which work to promote the progress of Science and the useful Arts.

I expect this proposal to overcome the objections by innovative companies in the pharmaceutical and biotech industry such as Johnson & Johnson, and companies in the high-tech industry such as Qualcomm that have currently blocked the Innovation Act in the Senate due to the effect on their patent assertion rights. If you are in support of this proposal, I encourage you to reach out to Senator Reid and indicate your support for the proposal.