Letter to Congress–December 4, 2013

Dear Congressional Representative:

We haven’t spoken before–I was President Obama’s student in Constitutional Law (University of Chicago School of Law, 2005).

I am writing you, because our patent system is broken, and the current system and proposed legislation (e.g., Innovation Act–HR 3309) fail to address our needs.  I propose a solution that can meet our needs (http://www.investinip.com/how-do-we-achieve-patent-reform/).

I would like for you to consider the ideas proposed here, and bring this up for discussion amongst policy decision-makers.

Our system is broken and, worse, we are failing to attack the fundamental problem behind patent trolling.  Instead of fixing trolling, proposed legislation will serve to weaken the American patent regime, undermining its ability to fulfill its Constitutional mandate. The effect will be to chill the incentive to invest in technological advances and entrepreneurial endeavors.

We must consider all perspectives before we make a decision to pass rushed bills, the economic ramifications of which have not been properly explored.

Admittedly, I am a troll–I monetize patent assets and have made a career of it (http://www.investinip.com/about-invest-in-ip/).

I’m here to tell you two things and ask for one: (1) the current legislation won’t stop trolling activity, (2) the current legislation and current-day system fail to meet a Constitutional threshold, and (3) there is a better solution that is incredibly simple, yet profoundly impactful to promote scientific and technological progress, as well as the Founding Fathers’ intent behind the Constitution’s Patent Clause.

(1) Current legislation won’t stop trolling

Now the trolling strategy will adjust to filing more patents in a single lawsuit–this is a power-in-numbers approach.  The more claims you assert, the greater the chances of one sticking.

If one valid claim is found to infringe, then the well-funded, multi-patent plaintiff can offset its own fees and go long for a full-scale jury verdict.

The current legislation won’t stop trolling, because the well-funded trolls will remain, they will file multi-patent lawsuits, and they will be willing to go the distance.

Defendants still face the risk of high patent-exposure, and will now be conflicted in terms of whether to fight to recover fees or pay to settle and avoid risk.

Hence, the current legislation will not solve the problem–litigation and trolling will continue, while smaller in quantity, it will be larger in scale and with greater risk.

(2) Current legislation fails to meet a Constitutional threshold

A patent owner’s “right to exclude” is a Constitutional protection afforded to all patent holders.  This is the fundamental backdrop that incentivizes investments into new technology and entrepreneurial endeavors–this is the backbone that supports scientific progress.

With a loser-pays system, it would undermine an individual’s or entity’s Constitutional right to enforce a valid and infringed patent against a multinational, well-funded corporation.  To illustrate, the proposed loser-pays system will chill investments into startup ventures and technological advancements, because the underlying patent assets would be more risky to legitimately enforce.

(3) The solution?

We need to fix our patent monetization system, not weaken our litigation system.

To start, what is the fundamental problem with our patent system?

Answer: our only recourse for monetization is through litigation.  This is problematic for several reasons, which I lay out here: http://www.investinip.com/how-do-we-achieve-patent-reform/

But instead of weakening the litigation system to curb litigation abuse, why don’t we create a better monetization system?

The model is simple–in fact, there are numerous asset classes monetized in the free market, the models for which provide a well-proven templates.

And solution is incredibly simple, yet profound: an open, free-market patent exchange.

Notably, such an exchange furthers our Founding Fathers’ intent behind the Constitution’s Patent Clause (see, e.g., http://www.investinip.com/patent-exchange-furthers-the-founding-fathers-intent-part-1-of-4/)

What is a patent exchange?  Why a patent exchange?  You can read more here: http://www.investinip.com/how-do-we-achieve-patent-reform/.

I am writing to you, because you swore to uphold the Constitution, and I believe it is your Constitutional duty to consider this perspective.

Not only will the proposed legislation fall short of meeting its real objective of curbing troll activity, but there is a downside we must consider, and it is our Constitutional responsibility to reflect upon its collateral effects.

I ask that you read the materials provided here, and help other policymakers consider a patent solution from another perspective–a more holistic perspective.

Thank you for your consideration.

Best,

Gau