Will Sunlight Turn Trolls to Stone?

The End Anonymous Patents Act, H.R. 2024, was introduced in Congress to force patent owners and their real parties in interest to identify themselves in public disclosures to the Patent Office. This is supposed to be an anti-troll measure that shines light on a shadow racket. In The Hobbit, trolls Bert, Bill and Tom turn to stone when the first sunlight of a new day touches them. Don’t expect the same effect on patent trolls if the bill becomes law.

Knowing the identity of whoever controls a patent would be useful for many purposes, but I read nothing yet that explains why it protects people from patent trolls. The ideal troll victim has never dealt with patents, lacks IP or even business counsel, and wants the whole thing to go away fast. Not making the troll mad and beating demand letter deadlines are top priorities for ideal victims. After an ill-equipped attempt to negotiate, they write a check.  

How will troll victims find the Patent Office records revealing the owner or real party in interest? What difference will that information make if they find it? The first helpful information, if the victim will only look, will be a blogger who writes about the scam and offers tips on responding. The patent owner / real party in interest database won’t do that.

The EAPA amends §261 of the patent laws on ownership and assignment. It requires owner and real party in interest disclosures when a patent issues, a maintenance fee is paid, or there is a transfer. There is one sanction—damages for infringement can’t run before the disclosure requirement is fulfilled.

This won’t help most troll victims. The last thing they want is to spend the money to get to the damages phase of an infringement lawsuit in federal court. Getting that far for most small businesses is equal to losing bet-the-company litigation. It doesn’t matter what happens by then.

If victims get good IP counsel early on, the troll’s game changes. But if the troll tests the victim’s resources and sues, most victims will never be made whole. Unless ownership information helps disqualify the troll’s counsel or leads to a dispositive decision on validity or inequitable conduct in a case filed by another shell entity, identity is only data to use in negotiations, Rule 7.1 disclosures, and the fact section of a brief.

Transparency is a virtue praised daily in our debates on business and government. It’s an ingredient in most recipes to remedy a public or private ill. I’m in favor of the EAPA because ownership information is valuable to competitors, parties considering transactions, lawyers handling patent prosecution, journalists, and many others. If it is a step forward in dealing with the serious problem of IP trolls, the case has yet to be made.

 

About Craig Pinkus

Craig Pinkus is a partner in the Intellectual Property Group. He also is a member of the Litigation and the Sports, Entertainment and Media Groups. He assists clients with a broad range of disputes and transactions involving all areas of intellectual property, entertainment, and other complex business arrangements. He has conducted trials and arbitrations throughout the United States and has argued appeals before the Seventh, Sixth and Federal Circuit Courts of Appeal, the Indiana appellate courts, and United States Supreme Court.
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