New Bill Would Stop Patent Trolls From Hiding Behind Shell Companies

from the about-time dept

Wed, May 22nd 2013 4:32pm — Mike Masnick

We've talked in the past about how patent trolling operations love to use shell companies to hide who actually owns the patents. Intellectual Ventures has thousands of shells, but it's even worse in many cases when it's smaller trolls, where no one has any idea who's actually behind the trolling. You may remember a few years back, when Reddit, Digg, Fark, Slashdot and others were sued over a bogus patent held by a shell company called "Gooseberry Natural Resources LLC," and we wondered if the collective communities behind those sites might be able to figure out who actually owned the patent in question. But even those hive minds failed to turn up much of use.

Thankfully, Rep. Ted Deutch has introduced a bill that would require a true disclosure of the owners of patents that are being used in litigation. Specifically, the bill would require a much clearer accounting of who "any real party in interest" would be concerning any patent. Failure to do so would mean that it would limit the ability of those patent owners to collect on any damages. Specifically, patent owners can only collect on damages that occur after the true owners of the patent are disclosed. This would help a tremendous amount, since so much in the patent troll world today is done in incredibly shady ways. It is believed that a very large number of patent trolling operations are actually run by patent lawyers themselves, who saw how lucrative it was, but who don't want to be publicly identified with their trolling. Forcing the actual owners to identify themselves would be a big help in making sure that people actually understand what's happening with patent trolling.

It's interesting to see Congress suddenly interested in patent reform again, even if in a piecemeal fashion. After spending nearly a decade fighting over a "comprehensive" patent reform bill that became the America Invents Act (a watered-down, mostly useless, bill) we kept hearing people say that patent reform was "done" in Congress. But in the past few months, three key bills have been introduced, each targeting the patent trolling problem. There was Rep. DeFazio's SHIELD Act, which would make it easier to shift fees and make trolls responsible for the costs of bogus lawsuits. Then, a few weeks ago, there was Senator Schumer's bill to make it easier to get tech patents reviewed relatively quickly by the USPTO to see if we can throw out more bad patents. And now this bill, called the End Anonymous Patents Act, from Rep. Deutch.

So far, none of the bills has received much momentum, but it's good to see that more and more people in Congress are realizing that the patent system is incredibly broken, and that trolls are a big part of that.

Deutch End Patent Anonymity (PDF)Deutch End Patent Anonymity (Text)

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Filed Under: anonymity, patent trolls, patents, shell companies, ted deutch

29 Comments

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Anonymous Coward, 22 May 2013 @ 4:50pm

Lets hope the same will apply too copyright trolls.
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Anonymous Coward, 22 May 2013 @ 4:52pm

So anonymity is good, except for when it's used by someone you don't like. Great message, Mike.
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Mike Brown (profile), 22 May 2013 @ 4:54pm

Re:
I don't think we read the same article.
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That One Guy (profile), 22 May 2013 @ 4:56pm

Given that I can't think of a single group offhand other than patent trolls or those using shell companies to sue without repercussions, will be interesting to see who exactly steps up to attack this proposal.
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That One Guy (profile), 22 May 2013 @ 5:01pm

Re:
Sounds like someone is a little peeved their 'business model' may soon be threatened.
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Mike Brown (profile), 22 May 2013 @ 5:12pm

Re:
Me neither, but I still predict this bill will die. If you have the means to set up shell companies to hide behind, you can afford to make contributions to certain political campaigns, too. A small start-up that's just trying to make an honest buck or two doesn't often have that luxury.
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DOlz (profile), 22 May 2013 @ 5:17pm

Re:
Anonymity to express ideas and have discussions (Federalist Papers for example) is fine.

Anonymity to hide when bringing a lawsuit against someone inhibits their ability to defend themselves.

Context try in sometime it makes the world less confusing.
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Bengie, 22 May 2013 @ 5:22pm

Re:
We should have an anonymous president and all votes should be anonymous.

Hmmm.. Maybe anonymity doesn't work for lawsuits.
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out_of_the_blue, 22 May 2013 @ 5:28pm

If the system could be changed, do away with trolling entirely!
I'd define "patent trolling" as bringing suit without ever having made an actual product, so if is just patent lawyers from deep cover, end that with a few simple tests.

And yet again, Mike has identified problem with present system is LAWYERS and other get-rich-quick grifters, not the system as such.

But in practice tiny changes are MORE difficult than HUGE changes! You need widespread Populist appeal, not a few pointy-headed policy wonks! So I skip over low-level weenie-ing and tweaks to simple honest confiscatory taxes on unearned income -- as used to be before The Rich and their pet "economists" put over the giant scam that lower tax rates on upper incomes would help the poor. -- WELL, hasn't, and as the US sinks into police state the correlation with tax cuts is enough to show causation.
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Anonymous Coward, 22 May 2013 @ 5:32pm

Re:
Your taking Mike totally out-of-context. Suing some based on bogus patent clams is not the same as communicating online.
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Anonymous Coward, 22 May 2013 @ 7:33pm

Re: Re:
"Context try in sometime it makes the world less confusing"

But, but, but zero tolerance!
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Anonymous Coward, 22 May 2013 @ 7:37pm

Re: If the system could be changed, do away with trolling entirely!
"problem with present system is LAWYERS"

Most lawmakers are lawyers, THAT is the problem.
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Arthur Treacher, 22 May 2013 @ 8:22pm

Re: If the system could be changed, do away with trolling entirely!
Welcome back, OOTB2! It's good to see your "sweat of the brow, miraculously giving birth to INVENTIONS!" logic.

But won't the "you have to make product" test make patents a lot less valuable? Independent inventors of mass produced products will *never* be able to get a patent, because, for example, it will be impossible to make a pop-tart baking system in their garage. This will inhibit the best kind of invention, the corporate-developed, mass-marketed thinger.
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horse with no name, 22 May 2013 @ 8:41pm

Coles Notes
So far, none of the bills has received much momentum

Basically, random Senators and House members suggest all sorts of odd legislation, often only so that in the next election they can claim to have championed a cause. Few of these personal bills make it past getting posted as a proposal, they die on the order table at the end of every session like most of the other crap. With 600+ elected grandstanders, the order papers are crowded with this sort of stuff.

So Coles Note: nothing like this has a hope of passing any time soon.
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saulgoode (profile), 22 May 2013 @ 10:51pm

And another...
EFF reports that Senator John Cornyn has introduced the "Patent Abuse Reduction Act".
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Zakida Paul (profile), 23 May 2013 @ 1:28am

Great
Now, what about tax avoiders?
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Pragmatic, 23 May 2013 @ 3:44am

Re: If the system could be changed, do away with trolling entirely!
But, Blue 2, the "unearned income" you speak of is gained by the patent holders, who (mostly) have done nothing to invent the product covered by the patent themselves.

I work for a company that calls dibs on anything I invent for as long as I work here. Walking away and taking that idea with me is considered theft even though I would be the one who did all the sweat-of-the-brow inventing.

The law itself permitted broader patents and patents on software, so your argument is invalid.
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Pragmatic, 23 May 2013 @ 3:45am

Re: Great
Since they're big party donors, good luck with that. *Fume*
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Anonymous Coward, 23 May 2013 @ 3:58am

i thought that it was also going to include a clause that made those who made illegal claims accountable? if right, that could perhaps start the ball rolling over false copyright claims and take downs. now that would be something really worth bringing into law!
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Power Guy Rules (profile), 23 May 2013 @ 5:44am

Need to add copyright owners to the list!
Take a good look at Prendaholes who are abusing the shell companies.
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Niall (profile), 23 May 2013 @ 5:46am

Re: Re:
When you are abusing anonymity to actively harm people (and there is no way you can say that lawsuits are not 'harm') then no, you should probably have to make a declaration.

How can you possibly expect to sue someone for breaking a patent without actually a) declaring what the patent is (Microsoft pay heed!) and b) saying who has a financial interest (even if it is only to the court officials)?
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Anonymous Coward, 23 May 2013 @ 6:53am

Re: Re: If the system could be changed, do away with trolling entirely!
Sweat-of-the-brow inventing that you are being paid for with your salary.
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staff, 23 May 2013 @ 7:46am

more dissembling by Masnick
More dissembling by Mad Mike.

�patent troll�

infringers and their paid puppets� definition of �patent troll�:

anyone who has the nerve to sue us for stealing their invention

The patent system now teeters on the brink of lawlessness. Call it what you will...patent hoarder, patent troll, non-practicing entity, shell company, etc. It all means one thing: �we�re using your invention and we�re not going to stop or pay�. This is just dissembling by large invention thieves and their paid puppets to kill any inventor support system. It is purely about legalizing theft. The fact is, many of the large multinationals and their puppets who defame inventors in this way themselves make no products in the US or create any American jobs and it is their continued blatant theft which makes it impossible for the true creators to do so. To them the only patents that are legitimate are their own -if they have any.

It�s about property rights. They should not only be for the rich and powerful. Our founders: Jefferson, Franklin, Madison and others felt so strongly about the rights of inventors that they included inventors rights to their creations and discoveries in the Constitution. They understood the trade off. Inventors are given a limited monopoly and in turn society gets the benefits of their inventions (telephone, computer, airplane, automobile, lighting, etc) into perpetuity and the jobs the commercialization of those inventions bring. For 200 years the patent system has not only fueled the US economy, but the world�s. If we weaken the patent system we force inventors underground like Stradivarius (anyone know how to make a Stradivarius violin?) and in turn weaken our economy and job creation. Worse yet, we destroy the American dream -the ability to prosper from our ingenuity for the benefit of our children and communities. Who knows who the next Alexander Graham Bell will be. It could be your son or daughter. It could be you. To kill or weaken the patent system is to kill their futures. Show me a country with weak or ineffective property rights and I�ll show you a weak economy with high unemployment. If we cannot own the product of our minds or labors, what can we be said to truly own. Life and liberty are fundamentally tied to and in fact based on property rights. Our very lives are inseparably tied to our property. Large multinational corporations are on the brink of destroying the American dream -our ability to pull ourselves up by our bootstraps from the working classes by building our own companies while making better futures for our children and our communities.

Prior to eBay v Mercexchange, small entities had a viable chance at commercializing their inventions. If the defendant was found guilty, an injunction was most always issued. Then the inventor small entity could enjoy the exclusive use of his invention in commercializing it. Unfortunately, injunctions are often no longer available to small entity inventors because of the Supreme Court decision so we have no fair chance to compete with much larger entities who are now free to use our inventions. Essentially, large infringers now have your gun and all the bullets. Worse yet, inability to commercialize means those same small entities will not be hiring new employees to roll out their products and services. And now those same parties who killed injunctions for small entities and thus blocked their chance at commercializing now complain that small entity inventors are not commercializing. They created the problem and now they want to blame small entities for it. What dissembling! If you don�t like this state of affairs (your unemployment is running out), tell your Congress member. Then maybe we can get some sense back into the patent system with injunctions fully enforceable on all infringers by all patentees, large and small.

Those wishing to help fight big business giveaways should contact us as below and join the fight as we are building a network of inventors and other stakeholders to lobby Congress to restore property rights for all patent owners -large and small.

For the truth about trolls, please see http://truereform.piausa.org/default.html#pt.
http://www.hoover.org/publications/defining-ideas/article/142741
http://ssrn.com/abstract=1792442
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The Groove Tiger (profile), 23 May 2013 @ 8:16am

Re: If the system could be changed, do away with trolling entirely!
TL;DR: "MIKE, Y U NO GENERALIZE!"
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coward (anon), 23 May 2013 @ 11:02am

Re: more dissembling by Masnick
Did you even RTFA? No one is saying that patent holders shouldn't be able to sue infringers. The bill is just saying that you can't do so without declaring who actually owns the patent. If I can use a bad analogy (because I know how much we all love bad analogies), think about being sued for property damage but the plaintiff won't identify the property or who owns it.

And yes, I know I shouldn't feed the trolls but it's been that sort of week.
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Hephaestus (profile), 23 May 2013 @ 5:56pm

Re: Re:
Simple question if anonymity is so bad, why didn't you ask his name?
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Hephaestus (profile), 23 May 2013 @ 5:58pm

Re:
So a simple question for you AC. If anonymity is bad why do we not know your name?
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btrussell (profile), 24 May 2013 @ 6:56am

Re: Great
Nothing wrong with avoiding tax. I think you meant tax evasion.
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Mike Raffety (profile), 24 May 2013 @ 1:25pm

Weigh in on this bill on Popvox
Sadly, there's 11 people speaking against it -- and until I clicked, NONE for it.

https://www.popvox.com/bills/us/113/hr2024
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