Patent Trolls and Maintenance Fees
posted by Gerard Magliocca
In a 2007 article about patent trolls, I recommended that (in lieu of abolishing software patents) the PTO sharply increase the amount and the frequency of patent maintenance fees. All patentees must pay a fee every few years to retain their patents. My thought was that trolls that hold patents only for litigation purposes might be discouraged from doing so if the cost of holding a non-performing one was much higher towards the end of the term. Furthermore, higher and more frequent fees would flush patents into the public domain more quickly (though not the really valuable ones).
A forthcoming empirical article in the University of Pennsylvania Law Review reaches a similar conclusion. Here is the abstract:
This article reports the findings of an empirical analysis of the relative ages of patents litigated by practicing and non-practicing patentees. Studying all infringement claims brought to enforce a sample of recently expired patents, I find considerable variance. Product-producing companies predominately enforce their patents soon after issuance and complete their enforcement activities well before their patent rights expire. NPEs, by contrast, begin asserting their patents relatively late in the patent term and frequently continue to litigate to the verge of expiration. This variance in litigation timing is so dramatic that all claims asserting the average product-company patent are resolved before the average NPE patent is asserted for the first time. Further, I find that NPEs are the dominant source of patent enforcement in the final few years of the patent term. NPEs, enforcers of just twenty percent of all studied patents, are responsible for more than two-thirds of all suits and over eighty percent of all infringement claims litigated in the final three years of the patent term. These findings cast serious doubt on the utility of the last few years of the patent term and suggest that Congress should, at a minimum, consider increasing the frequency and magnitude of maintenance fee payments in the latter half of the patent term.