The US Supreme Court – A Solution to Patent Trolling

US courts seem to be taking over where Capitol Hill has failed in its attempt to address the problem of patent trolls. So far, neither the legislators nor the courts have directly confronted the presence of government sponsored patent trolls and their potential impact on global trade. The US patent system is one of the most reputed worldwide for granting protection to innovations and new ideas.

At least America is doing something right; killing jobs all over California and Appalachia, spending money we do not have, giving out food stamps to healthy Americans who refuse to work, watching Syria use chemical weapons on its own people, are not the bright spots.

Outstanding News

Some of the latest Supreme Court decisions are likely to have an influence on how the system works. As a consequence, some patent lawyers are of the opinion that many of these decisions are likely to help limit the actions of GSPTs or Government Sponsored Patent Trolls that carry the financial backing of governments.

For the most part, GSPTs are managed with the intent of accumulating patents regardless of their merit. These are used to aggressively extract rents and foster protectionism, which is the practice of shielding a country’s local industries from foreign competitors by taxing imports.

Some of the prime examples include a case between Taiwan’s GSPT, the Industrial Technology Research Institute (ITRI) and LG Corporation (Korea). The former filed a lawsuit in US District Court for The Eastern District of Texas claiming infringement of its backlight module patents used in televisions and monitors by LG. The court limited the jurisdiction of the patent by ruling that LG were not guilty of infringement. In this case the court ruled that ITRI did not have an industry in the United States relating to the backlight module.

Just an Idea

The Supreme Court went on to reaffirm the definition of a valid patent in its recent ruling (Alice Corporation vs. CLS Bank). The ruling states that it is essential for patents to be associated with an idea and specific concerns as to how the idea will be actionable. In this case, the Supreme Court deemed the patents held by Alice Corporation invalid since they were simply based on an idea.

There was no guidance on how that idea could be transformed into an invention or innovation. In the Alice Corporation vs. CLS Bank case, the idea was financial transfer from one party to another with the use of a computer as a third party. The highest court in the country stated that only the requirement for the implantation of generic computers did not transform the abstract idea into an invention that warranted patent protection.

The effects of the ruling in the Alice Corporation vs. CLS Bank case is likely to be felt significantly in the software industry even though both parties are banking institutions. The ruling can potentially have an effect on the way patents are used in the software industry. One of the major observations from this ruling is the way patents are awarded from now on.

America and common sense are not coinciding too much these days but at least we have some good news on the patent front.

America and common sense are not coinciding too much these days but at least we have some good news on the patent front.

Trolls Beware

Patent lawyers in the software sector are well aware and are concerned about how common patent trolling is in the industry due to ambiguity in exactly is patentable. Currently, there are a large number of patents being transferred, giving rise to trolls. Following the US Supreme Court intervention it is likely to become costlier for trolls to file suits and claims against companies and individuals if the patents they consider buying are not likely to meet the Supreme Court’s new precedent. In addition, patent lawyers are of the opinion that trolls will be forced to determine the validity of each patent, which will lead to an increase in costs that can impact their margins.

The Supreme Court’s decision to link ideas with transformation could well spell doom for patent trolls who have no intention to undertake any transformational activities with patents. For companies, individuals and their patent lawyers, this could well be the beginning of a new era in patent protection and a defining line between trolls and protection of their innovations.