By Scott A. McKeown
| February 19, 2013
President Decries Software Patent Extortionists

President Decries Software Patent Extortionists


Last week during his YouTube broadcast, President Obama labeled software patent trolls as extortionists. In doing so, he also commented that the recent patent reform only went "half way" to solving the existing patent litigation explosion in this area. Shortly thereafter the Internet was abuzz that perhaps the Administration was considering a new legislative effort.

Perhaps most interesting is the President's characterization of the previous reform effort as only going "half way."  Can the Administration really be considering a second salvo?

It is worth noting that during the same conversation the president discussed whether or not it made sense to continue to mint pennies, raise the minimum wage, manage gun control, and a host of other "issues" lobbed his way from the Internet. While the ongoing patent troll dilemma is undoubtedly worthy of high level attention, with the current reform legislation only months old as law it seems a bit premature to announce it as halfway effective—especially considering it took near a decade to enact in the first place.

As pointed out here repeatedly, the new post grant patentability challenges of the America Invents Act (AIA) have been widely embraced as troll killers. In fact, the business model that permits business method and e-commerce patent holders to harass entire industries has been essentially destroyed. The problem is these patent trolls are now patent zombies; they don't realize that they are dead yet. Until the change in the law trickles down to the pocketbook of the contingency firms that bring such cases, they will proliferate for a short time longer. But make no mistake, the ability to stop the high cost litigation as a matter of right will end this game for many on the software side.

Further, the impact of the AIA patentability challenges (now 5 months old) are only now beginning to impact the troll landscape. Stakeholders should not hold their breath that legislation will appear that magically outlaws all such suits. Instead, they should leverage the low cost options now available to undermine the existing settlement driven business models. Once the delays and losses begin piling up for contingency litigation firms future such investments will be far less attractive.
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