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GAO Study Confirms Overbroad Patents Feed Opportunistic Trolls

The U.S. Government Accounting Office (GAO) just released a long awaited study on the consequences of patent litigation by nonpracticing entities, aka patent trolls. The study validates the position of Rackspace and thousands of other companies: overbroad and inscrutable software patents, which shouldn’t have been issued in the first place, are the primary reason patent trolls are able to target and extort settlements from legitimate operating businesses, diverting precious capital away from research, development and job creation. The GAO report adds to the overwhelming body of evidence that Congressional action is sorely needed to bring the $29 billion patent troll problem under control.

According to the report, “(o)ther stakeholders, including operating companies, judges, and legal commentators, also said some patents, particularly software-related patents, should never have been issued because they were obvious, not novel, or lacked definiteness.” While this conclusion is not news to those of us who have been hit with frivolous patent troll suits, the GAO study is a helpful document that supports the need for change.

The report underscores the argument that Congress needs to act. This problem cannot be solved at the United States Patent and Trademark Office (USPTO) because there are 20 years of bad patents out there. The innovation economy needs action from Congress now.

We strongly support the Patent Abuse Reduction Act filed by Sen. John Cornyn, and the Patent Quality Improvement Act filed by Sen. Chuck Schumer. We also look forward to Chairman Patrick Leahy’s bill which is expected soon. In the House we support the Patent Litigation and Innovation Act of 2013 filed by Rep. Hakeem Jeffries and Rep. Blake Farenthold, and the STOP Act filed by Rep. Darrell Issa and Rep. Judy Chu. We also look forward to Chairman Bob Goodlatte’s bill.

The problem is real, and more and more people around the world are learning about it, as demonstrated by the BBC News story that was published this week. This international media attention is building momentum for action, and we are hopeful Congress will get something done this fall. Let them hear from you. Send a message in support of reform using the App Developers Alliance tool. It will take just a minute and it will definitely make a difference.

About the Author

This is a post written and contributed by Alan Schoenbaum.

Alan Schoenbaum is Special Counsel for Rackspace.

Prior to joining Rackspace in 2005, he was a partner at Akin Gump Strauss Hauer & Feld LLP in San Antonio, Texas. Alan has more than 25 years of experience in corporate and securities law and mergers and acquisitions. Throughout his legal career he has represented public and private growth companies, venture capital funds and their portfolio companies. Alan received his B.A. in English and his law degree from the University of Texas at Austin.


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