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14 July 2017Patents

US patent system in poor health: former Fed Circuit chief judge

The health of the US patent system is poor, with most patent owners unable to enforce their rights, according to a former chief judge of the US Court of Appeals for the Federal Circuit.

Paul Michel, who served in the role from 2004 to 2010, was speaking at a House of Representatives committee hearing on the impact of bad patents on US business yesterday, July 13,

Michel added that the impact of “bad actors” within patent litigation in the US has had a “devastating impact on nearly all but giant multinational corporations”.

He added: “With the best of intentions, the Supreme Court, the Congress and the PTO have worked so hard to root out invalid patents, stem frivolous suits, and curb abusers of the patent system that its efficacy has been diminished or destroyed for the majority of owners who are responsible actors.”

Many of the speakers at the House Judiciary Committee hearing, including those from start-up companies and the financial sector, focused on the actions of non-practising entities (NPEs), claiming many companies are forced to pay a settlement fee for low-quality patents rather than face costly litigation.

Sean Reilly, senior vice-president of the Clearing House, a payments company, said this is particularly prevalent in the financial sector.

“If an NPE has a low‐quality business method patent that it asserts against one credit union, bank or merchant, it likely means that patent can be asserted against every other entity operating in that same space,” he explained.

“Given the high cost of patent litigation, banks are heavily incentivised to settle and license rather than litigate. Every dollar spent on such meritless litigation is one less dollar that can be deployed in our nation’s communities.”

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24 July 2017   WIPR readers have agreed with the sentiment of a former chief judge of the US Court of Appeals for the Federal Circuit that the US patent system is in poor health.