DEMAURA: The creepy business of patent trolls
Free markets and pro-paycheck policy are necessary to build a strong economy rich with quality employment opportunities for all Americans. As the country has shifted from a manufacturing, labor-intensive workforce toward technology- and innovation-based jobs, it is important that we continue to protect our employees and companies, even if the industries on which we rely most heavily change over time.
The Bureau of Labor Statistics shows that 6 million factory jobs vanished between 2000 and 2009 in the United States. Conversely, jobs in information technology, software and design are on the rise with the steady influx of new technologies and advancements.
The United States must remain a competitive player as other countries expand their operations and innovations as well. Harboring the pioneering spirit of America is important to our economic growth and competitiveness in the global marketplace. Patent-system manipulators serve as a threat to the free-market system. Without oversight and vigilance to the ever-growing number of new threats to our patent system, these threats could impact large and small businesses alike, and inhibit job creation and American innovation.
Congress has recently introduced a variety of legislation aimed at addressing patent-assertion entities — or patent trolls — and is working on policy to prevent abuse to the U.S. patent system and patent holders. Patent trolls are accused of seeking legal action against patent holders and companies based on often frivolous claims. These entities hold intellectual property only to seek infringement settlements and court awards rather than licensing patents or producing anything. The often costly lawsuits have a trickle-down effect that impacts consumers and the economy as businesses are forced to allocate resources toward defending against frivolous lawsuits instead of increasing output and creating jobs.
A severe and often overlooked phenomenon is foreign governments entering this assertive role and seeking litigation on companies outside of their country. The governments of France, Japan, South Korea and Taiwan, among others, have founded state-controlled patent trolls.
Many of these foreign-government-controlled entities have openly admitted to favoring companies in their country of origin while actively seeking action against foreign companies. The advent of these entities adds a new, disturbing and geopolitical element to the debate about patent trolls and how to protect legitimate inventions without stifling innovations.
What do these government-sponsored patent-assertion entities look like? A leading example is France Brevets, which is a 100 million euro investment fund committed to “patent promotion and monetization.” The fund is jointly backed by the French government and publicly owned Caisse des Depots. France Brevets has openly stated that it has a bias toward French companies.
Japan has a similar patent-assertion entity, Innovation Network Corporation of Japan, which is a public-private partnership formed to advance the value of business in Japan by promoting innovation. The businesses investments are overseen by the Ministry of Economy, Trade and Industry in Japan. It is funded largely by the Japanese government, which is injecting 266 billion yen and a group of private corporations is providing 14 billion yen. The corporation is established for a period of 15 years, ending in 2024.
Government-sponsored patent-assertion entities, such as Innovation Network Corporation of Japan and France Brevets, promote an anti-competitive precedent across industries where patents are essential. The market should remain the driver of innovation and competition, not governments with funding for aggressive behavior. Their activities complicate global cooperation efforts on trade-related matters, which are becoming more and more important.
The U.S. Patent and Trademark Office issued more than 276,000 patents in 2012, up 66 percent since 2002. There are no signs of a decline in applications and new ideas. Fortunately, Congress has begun to address patent-assertion entities and the impacts they have on the economy. In spite of Congress‘ bipartisan efforts, though, foreign governments are continuing to actively seek infringements and legal action toward foreign patent holders, causing harm to companies and good jobs, global competitiveness and the free market.
Stephen DeMaura is president of Americans for Job Security.