* Patent move comes ahead of Obama's trip to Silicon Valley
* Courts, Congress also taking aim at "patent trolls"
* Cisco Systems, Apple, Google pushing for action
(Recasts first paragraph, adds comment from entities targeted
By Diane Bartz
WASHINGTON, June 4 President Barack Obama took
steps on Tuesday intended to curb lawsuits brought by companies,
disparagingly called "patent trolls," that make or sell nothing
but specialize in suing others for infringement, and he asked
for new federal regulations and action from Congress.
The offensive - announced ahead of an Obama fundraising trip
this week to Silicon Valley in California - came as U.S.
lawmakers and courts also are looking for ways to reduce the
number of unwarranted patent lawsuits.
Such lawsuits have ballooned in recent years, particularly
in the technology sector, from companies that buy and license
patents from others, including individual inventors.
Critics say those patent portfolios are assembled as a
springboard to litigation; many firms argue they are providing a
service to inventors, or protecting against the loss of
licensing fees that users of the patents should pay.
Cisco Systems Inc, Apple Inc, Google Inc
and other big technology companies have been pushing
for legislation that would reduce the number of times each year
that they are sued for infringement.
Among other steps, the White House called on Congress to
pass legislation to make it easier for a federal judge to award
legal fees to the winner of a patent case if the judge deems the
It also asked lawmakers to make it harder for companies to
convince the U.S. International Trade Commission to ban sales of
products made with technology that infringes on a patent.
Currently, the ITC has a lower standard for ordering an
injunction than does a U.S. District Court.
The disparity has led to a tidal wave of patent infringement
complaints filed at the ITC.
Obama asked lawmakers to require companies that sue for
infringement to have updated ownership information on file with
the U.S. Patent and Trademark Office. He also urged the patent
office, part of the Department of Commerce, to write a similar
The actions were aimed at improving incentives for high-tech
innovation, a major driver of economic growth, the White House
said. "Stopping this drain on the American economy will require
swift legislative action, and we are encouraged by the attention
the issue is receiving in recent weeks," White House spokesman
Jay Carney said in a statement.
Companies specializing in patent litigation filed 2,921
infringement lawsuits in 2011, the latest figures available, 62
percent of all such cases filed, Colleen Chien, who teaches
patent law at Santa Clara University Law School, said in a blog
post for PatentlyO.
Allowing judges to decide that certain lawsuits are abusive
and requiring losers to pay the winners' legal fees would be key
steps toward killing frivolous lawsuits, said Ed Reines, a
member of an advisory panel for the U.S. Court of Appeals for
the Federal Circuit, which hears most patent appeals.
Another important step would be to reform the ITC so
companies cannot get a sales injunction not available in
district courts, according to Reines, a lawyer with the firm
Weil Gotshal & Manges.
Two companies often accused of being trolls are Eolas
Technologies and Innovatio IP Ventures LLC. Both argued on
Tuesday that allowing companies that specialize in legal
strategy to handle infringement lawsuits makes sense.
"The idea that because you're not actually making things,
you shouldn't be able to get a return on your investment, I
think that's wrong," said chief executive Mark Swords of Eolas,
which has sued companies ranging from Facebook to Walt
Disney over patents for interactive technology.
Matthew McAndrews, who represents Innovatio, urged lawmakers
to consider requiring companies that fight infringement lawsuits
and lose to pay the plaintiff's legal fees.
"Why shouldn't there be a balanced provision that says in
the case of a large entity willfully infringing a non-practicing
entity that all of the fees should be shifted in that case?"
McAndrews said. "Who gets to define an abusive patent litigation
claim? It (Obama's proposal) places way too much emphasis on
LEGISLATION BREWING, COURTS AT WORK
Congress already is working on a variety of bills. The heads
of the judiciary committees in the Senate and House of
Representatives - Democratic Senator Patrick Leahy of Vermont
and Republican Representative Robert Goodlatte of Virginia -
have put forward a draft bill.
Their measure would improve access to information about who
owns patents, reduce discovery burdens in lawsuits and make
other changes to enable judges to identify abusive cases early
in the process and, presumably, dismiss them.
The bipartisan proposal, once finalized, is considered to
have a good chance to move through Congress.
Another bill - introduced by Representatives Peter DeFazio,
an Oregon Democrat, and Jason Chaffetz, a Utah Republican -
would require certain plaintiffs to pay all legal fees if they
sue for patent infringement and lose.
And efforts are under way in the courts to rein in abuses.
Randall Rader, who has been on the U.S. Court of Appeals for
the Federal Circuit since 1990 and became chief judge in 2010,
has circulated a four-point plan to stem abusive patent
litigation. The plan overlaps with some of the new White House
proposals and some of the planned legislation.
"The litigation abuse comes when a company is asserting a
patent with a minimal value ... but they're asserting it for
billions of dollars," Rader told Reuters in an interview. "That
disproportionality is an abuse of the system."
Rader's plan calls for courts to restrict pre-trial
discovery - gathering evidence in a case - to key terms and key
people and would limit the number of patents in each case.
It also calls for courts to evaluate the value of any
infringement early on and dispatch smaller cases quickly, and to
consider making plaintiffs pay the legal fees of defendants if
the judge concludes that the original lawsuit was unfounded.
The court within weeks will formally begin an effort to cut
the number of patents in each case, Rader said. The other two
issues are down the road, Rader added.
(Additional reporting by Sarah McBride in San Francisco, and
Mark Felsenthal and Roberta Rampton; Editing by Ros Krasny, Will
Dunham and Cynthia Osterman)