Plight of the American Innovator

The American innovator is at risk. Our U.S. patent system unfortunately favors the speculators over the innovators. In the fight against questionable patent suits brought by non-practicing entities (i.e., patent trolls), those disagreements have become a one-sided affair in favor of the investor. This unjust circumstance arises due to the immunity patent trolls have from the innovator’s patents. A frustrating predicament for an innovator who has often made substantial investments in protecting his or her technology that go for naught in a dispute with an entity who does not put products into the stream of commerce. Now § 285 of the Patent Act allows a prevailing party to collect its attorney fees. But the ability to collect fees is barricaded behind the double walls of exceptionalism and discretion - both of which make such awards highly unlikely. Exceptionalism is rarely found because non-practicing entities almost never do anything that rises to that level of improper conduct. Trolls do not make anything and thus do not infringe patents, let alone willfully infringe to make a case exceptional. Trolls do not commit fraud at the patent office because they buy patents secondhand on the open market. Trolls do not bring cases in bad faith or conduct vexatious litigation because that would jeopardize their chances of making money from their patent investments. Even if one were to prove exceptionalism, that is not enough. Rather, an award of attorney fees is discretionary which offers no certainty to the businessman. And so, the innovator is left with a poor set of choices – (1) fight it out at great financial costs and business disruption or (2) try to make the best deal possible while recognizing his or her inability to negotiate a fair outcome. Even more concerning is that the strength of the innovator’s defenses (i.e., non-infringement or invalidity of the asserted patents) are no longer a consideration. The decision about whether to fight or take flight becomes purely an economic one. As such, questionable patents continue to be asserted against companies over and over again because the current patent statutes fail to incentivize challenges to patents of doubtful validity. Thus, our patent system is broken and in desperate need of reform.