Kill the Trolls

A proposal to rewrite 35 U.S.C. 261 which covers patent ownership and assignment rights

One of the biggest problems with the US patent system is the existence of patent trolls. Patent trolls, also referred to as non-practicing entities (NPE), are shell companies which exist for no other reason than to amass patent portfolios which they use to bring often dubious patent infringement lawsuits. This type of activity results in billions of dollars in economic loss due to unnecessary litigation [find citation].

The constitutional foundation for patent law is to "promote the Progress of Science and the Useful Arts." Objectively speaking, patent trolls do nothing to this end. While they claim to increase the incentive for innovators by enabling a fluid patent exchange marketplace, patent trolls essentially only increase the value of bad patents which are too vague or unworthy of commercialization. This brings us to the key sticking point in current patent assignment law - should a patent whose value lies only in its ability to bring an infringement lawsuit be assignable? Does such an assignment undermine the constitutional promise to promote science and the useful arts? I propose the answers to these questions are no and yes respectively.

Trolls are made possible by 35 U.S.C. 261 of the patent law which provides "... patents shall have the attributes of personal property. Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing." This unlimited ability to assign patents allows them to be used for purposes other than public benefit or commercialization. Following are a set of proposals for amending 35 U.S.C. 261 to ensure that patent assignment rights conform to the public interest foundation for patent law enshrined in the U.S. Constitution.

Existing 35 U.S.C. 261

Subject to the provisions of this title, patents shall have the attributes of personal property.

Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing. The applicant, patentee, or his assigns or legal representatives may in like manner grant and convey anexclusive right under his application for patent, or patents, to the whole or any specified part of the UnitedStates.

A certificate of acknowledgment under the hand and official seal of a person authorized to administer oaths within the United States, or, in a foreign country, of a diplomatic or consular officer of the United States or an officer authorized to administer oaths whose authority is proved by a certificate of a diplomatic or consular officer of the United States, or a postille of an official designated by a foreign country which, by treaty or convention, accords like effect to apostilles of designated officials in the United States, shall be prima facieevidence of the execution of an assignment, grant, or conveyance of a patent or application for patent.

An assignment, grant, or conveyance shall be void as against any subsequent purchaser or mortgagee for avaluable consideration, without notice, unless it is recorded in the Patent and Trademark Office within threemonths from its date or prior to the date of such subsequent purchase or mortgage.

Proposal 1: Patent Assignment Dissolves If Assignee Does Not Practice Patent Within 18 Months

Pursuant to Article I, Section 8Clause 8 of the United States Constitution, and subject to the limiting provisions of this title, patents shall have the attributes of personal property.

Applications for patent, patents, or any interest therein, shall be assignable in law, by an instrument in writing,only under circumstances which clearly indicate that assignee has concrete plans to practice the patent, orlicense the patent to a third-party which plans to practice the patent, within eighteen months. This time periodcan be extended if sufficient evidence is presented that practice of the patent is imminent.

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Proposal 2: Patent Monopoly Tax for Non-Practicing Entities

Pursuant to Article I, Section 8Clause 8 of the United States Constitution, and subject to the limiting provisions of this title, patents shall have the attributes of personal property.

For each year that a patentee cannot demonstrate progressive practice of the patent with concrete commercial, public benefit or research goals, patentee must pay a patent monopoly tax. This tax is $5,000 for the first year, $10,000 for the second year, and $20,000 for each year thereafter. These tax proceeds will be collected by the USPTO and will be used to promote federal small business and entrepreneurship initiatives.

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Proposal 3: Combination of Proposals 1 & 2 - Patent Monopoly Tax + Assignment Dissolution


Proposal 4: Patents Are Private-Public Contracts, Not Poperty

Pursuant to Article I, Section 8, Clause 8 of the United States Constitution, and subject to the provisions of this title, patents shall be contracts between inventors and the citizens of the United States.

Patentees promise to use the exclusive monopoly rights detailed in this title to create goods and/or services for public consumption; or to conduct scientific research. In return, the citizens of the United States grant patentee the exclusive monopoly rights detailed in this title for a term of ten years.

Patentees may assign their rights, by an instrument in writing, only under circumstances which clearly indicate that the assignee has concrete plans to practice the patent in adherence to the original promise to create goods and/or services for public consumption; or to conduct scientific research.

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