The White House said that the measures are "designed to protect innovators from frivolous litigation and ensure the highest-quality patents" are in the US "system".
The term 'patent trolls' is used to describe companies that apply for or purchase patents in order to sue other companies for infringement. The companies make money by forcing firms to pay to settle claims brought against them rather than face a costly legal battle in court.
A report entitled 'Patent Assertion and US Innovation' (17-page / 835KB PDF) published by the White House said that patent trolls engage in "aggressive litigation" and use tactics such as "threatening to sue thousands of companies at once, without specific evidence of infringement against any of them; creating shell companies that make it difficult for defendants to know who is suing them; and asserting that their patents cover inventions not imagined at the time they were granted".
The number of lawsuits initiated by patent trolls in the US has tripled in the past two years and now account for 62% of all patent infringement cases, the report said. It is estimated that patent trolls have threatened legal action against more than 100,000 firms in the past year, it said.
The White House has now outlined a number of initiatives aimed at cracking down on patent trolling. It said that the US Patent and Trademark Office (PTO) would begin to require patent applicants and owners to detail who the "ultimate parent entity" is that controls the patent or application when proceedings are before it. In addition, PTO examiners are to undergo "targeted training" to ensure that the function of patents is in line with what is being claimed.
The PTO will also introduce a programme of education for retailers, consumers and other 'end-users' to explain to them their rights when they are challenged over their use of products that allegedly infringe patent rights by patent trolls, the White House said. In addition, the Administration has said it will engage with stakeholders in order to "develop new ideas and consensus around updates to patent policies and laws" and expand an existing research programme in order to compile "more robust data ... on the issues bearing on abusive litigation".
The White House also said that efforts will be made to improve processes and standards used when determining whether redesigned products being imported are sufficiently different from those originally barred from import due to patent infringement.
Obama has also called on the US Congress to draft new legislation that would help boost innovation and combat patent trolls.
Among the measures the President has called on Congress to support are new laws that give more "discretion" to district court judges to rule that patent trolls should pay the legal fees of companies wrongly accused of patent infringement. Obama also wants new laws to better protect businesses and consumers "against liability for a product being used off-the-shelf and solely for its intended use" if it emerges those products are subject to patent infringement claims.
"Innovators continue to face challenges from ... companies that, in the President’s words 'don’t actually produce anything themselves,' and instead develop a business model 'to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them'," the White House said in a statement. "Likewise, the so-called 'Smartphone Patent Wars' have ballooned in recent years and today, several major companies spend more on patent litigation and defensive acquisition than on research and development. Stopping this drain on the American economy will require swift legislative action."
"We stand ready to work with Congress on these issues crucial to our economy, American jobs, and innovation. While no single law or policy can address all these issues, much can and should be done to increase clarity and level the playing field for innovators," it added.
