Obama Plans to Take Action Against Patent-Holding Firms
By JARED A. FAVOLE And BRENT KENDALL
WASHINGTON—The White House on Tuesday plans to announce a set of executive actions President Barack Obama will take that are aimed at reining in certain patent-holding firms, known as "patent trolls" to their detractors, amid concerns that the firms are abusing the patent system and disrupting competition.
Mr. Obama's actions, which include measures he wants Congress to consider, are intended to target firms that have forced technology companies, financial institutions and others into costly litigation to protect their products. These patent-holding firms amass portfolios of patents more to pursue licensing fees than to build new products.
The firms say they are doing nothing wrong, just using patents that were legally granted by the U.S. Patent and Trademark Office. They say they promote a fair market by protecting smaller inventors.
To help deter questionable lawsuits, the Obama administration plans to, among other things, direct the Patent and Trademark Office to start a rule-making process aimed at requiring patent holders to disclose the owner of a patent, according to senior Obama administration officials. Businesses sometimes are sued by shell companies and don't always know who actually owns the patent they are being accused of infringing, and whether the firm holds other relevant patents.
In addition, the president plans to ask Congress to pass legislation that would allow sanctions on litigants who file lawsuits deemed abusive by courts, officials said.
Those are among five executive actions and seven proposed legislative changes that Mr. Obama is expected to recommend, officials said. The actions and recommendations are to be released as part of a White House report on patent-holding firms.
Mr. Obama is expected to direct the patent office to train examiners to scrutinize applications for overly broad patent claims.
He also is looking to rein in the growing use of the International Trade Commission to settle patent disputes. In recent years, patent-holding firms have increasingly filed infringement claims at the ITC, which has jurisdiction over certain unfair trade practices and can bar the importation of products that infringe patents. The ITC process usually moves more quickly than a patent-infringement case in federal court.
The Obama administration would like Congress to change certain ITC legal standards and ensure that the agency has flexibility in hiring its judges. The president will order a review of existing procedures at the ITC, officials said.
The president has taken a dim view of certain patent-holding firms. In February, he said some firms "don't actually produce anything themselves. They're just trying to essentially leverage and hijack somebody else's idea to see if they can extort some money out of them."
The new actions build on other government efforts. The Federal Trade Commission and Justice Department are examining whether some patent-holders are disrupting competition in high-tech markets.
The administration sees the president's actions as a continuation of his efforts to revamp the patent system. In 2011, Mr. Obama signed a law overhauling the patent system for the first time in six decades.
