Each year the federal judges of the US Northern District of California have a conference to discuss matters related to the improvement of administration of justice in the district.  This year’s conference, held April 11-13, had programs on topics as diverse as NSA surveillance issues, whether all civil cases should proceed to trial in a year, and a review of the “hot” cases before the US Supreme Court.  We were honored to be invited to participate in a panel on patent litigation (even though our panel was scheduled for 8:30 on Sunday morning).  Magistrate Judge Paul S. Grewal led a lively discussion among me, Cynthia Bright, VP and AGC, IP Litigation & Public Policy at Hewlett-Packard, Barney Cassidy, General Counsel at Juno Therapeutics, and Catherine Lacavera, Director of IP and Litigation at Google.  We discussed and debated specific issues related to so-called “non-practicing entities”, fee-shifting and other “patent reform” proposals now before Congress, the state of damages theories, and the impact of the AIA.  As we have said in prior posts, our bottom line is that while there is a “patent troll” problem, any reforms should be measured and balanced, and – particularly as it relates to the conference audience – should preserve the discretion of the judges to administer justice in each patent case on its merits, regardless of the identities of the litigants.

Just as the Senate is considering the government’s latest patent reform measure, the “Patent Transparency and Improvements Act” (S-1720), IPWatchdog has published an excellent four-part series titled “Myths of the Patent Wars.”

Authors David Kline and Bernard Cassidy seek to clarify a broad range of facts and arguments about the patent licensing business.  In particular, the authors argue that global product companies are “hijacking” the legitimate work of lawmakers in curbing bad actors by expending huge resources on lobbying and media relations to propagate false claims about the patent system.  What are the misleading claims that underlie Big Tech’s legislative agenda?

1. An ” explosion of patent litigation” greater than any in history is imposing an unwarranted burden on industry and diverting resources better spent on innovation.
2. “Non-practicing entities” (NPEs) (i.e., entities which do not make or sell products) are a new breed of parasitic patent litigant that hinders economic growth and contributes nothing to society.
3. These NPEs have “stampeded” the International Trade Commission (ITC) with spurious infringement claims, “holding up” products that consumers want and need in order to extort settlements from deep-pocketed tech importers like Apple and Google.
4. Undeserving patent holders are winning “excessive damages” from gullible juries for the infringement of even the most minor patents.
5. Software patents are stifling innovation in the industry, and should not be allowed because software innovation is far more incremental and iterative than in other industries.

These deceptive claims are meant to justify and buttress a legislative agenda aimed at immunizing this small coterie of technology giants from the costs of their patent infringing behavior, says retired Chief Judge Paul Michel of the U.S. Court of Appeals for the Federal Circuit.

We wholeheartedly agree.  And, as we make clear in our Patent Licensing Principles, we think that there is an obligation for responsible behavior from the parties on both sides of the patent licensing table.  While the current focus of the rhetoric is strictly on licensors, the behavior of infringers cannot and should not be ignored.. The US patent system works if both sides act fairly and responsibly.

A licensee’s obligations include:

• To investigate the licensor’s claims fairly and honestly, and if it determines that the licensor is likely to have valid and enforceable claims, conduct good faith discussions with a willingness to take a license on fair and reasonable terms.
• To engage in good faith discussions with the licensor and make reasonable, good-faith efforts to timely meet with and respond to the licensor.  Individuals acting on behalf of the licensee must have the authority to negotiate with, and if appropriate, reach an agreement with the licensor.
• To be willing to take a fair and reasonable license where appropriate.  This means that the licensee must fairly acknowledge that if its activities use, or are likely to use, the invention claimed in a licensor’s patent, then the licensee owes the licensor reasonable compensation for the use of that patented technology.   A licensee should not take a free ride off another’s patented innovation.

This Washington Post article sheds further light on the growing influence of Big Tech.  Google made its very first foray into lobbying in 2003, and by 2012 the company was the second largest corporate spender on lobbying in the US.  This summer Google will move to a new Capitol Hill office, doubling tis Washington space to 55,000 square feet – roughly the size of the White House.

As Google’s lobbying efforts have matured, it has pioneered new and unexpected ways to influence decision-makers.  For example, it has befriended key lawmakers in both parties by offering free training sessions to Capitol Hill staffers and campaign operatives on how to use Google products that can help target voters.

Would you go so far as to agree with Judge Michel that global tech giants are engaged in the process of “regulatory capture” — the term of art used in economics to describe the means by which groups with a high-stakes interest in the outcome of policy or regulatory decisions gain the policy outcomes they prefer?

Share your comments with us.