The prospects seem unusually good that patent reform will bring together President Obama and Congress, even if they don't agree on much else during his final two years in office.
The reason for such bipartisanship is simple: non-practicing entities, or as they're known disparagingly, "patent trolls." NPEs are businesses or individuals who own inactive patents used only to sue other companies for allegedly infringing on their rights, hoping to net cash settlements or hefty court judgments.
Once thought of as a problem primarily annoying technology companies such as Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL), patent infringement lawsuits have multiplied with the spread of Wi-Fi into hotels, restaurants and retail shops.
One result is a chorus of patent reform proposals that is growing louder from different sectors of the economy. Last month, the lobbying group United for Patent Reform was formed, comprising tech giants Facebook (NASDAQ:FB) and Google (NASDAQ:GOOGL), the National Retail Federation, Williams-Sonoma (NYSE:WSM), Amazon (NASDAQ:AMZN) and the National Restaurant Association.
Not Just A Tech Issue
"This is a Main Street issue," said Beth Provenzano, vice president at the National Retail Federation. "This isn't just a tech issue."
The group has issued a letter to leaders in the House and Senate judiciary committees calling for a law that requires more transparency from companies that issue demand letters for alleged patent infringement, provides less expensive alternatives to litigating in the courts, forces NPEs to explain their claims in more detail in their lawsuits, and mandates that losing plaintiffs found frivolous must pay their opponents' legal fees.
"We are talking to members of Congress and their staffs daily about the substance of new legislation," said Jon Potter, president of the Application Developers Alliance. "We think it's going to move."
This month, the Innovation Act, a bill designed to curb patent litigation abuses, was introduced in the House. Republican senators have declared patent reform a priority in the new Congress.
The lobbying and legislation come as patent lawsuits are on the rise, partly due to recent restrictions on the number of defendants that can be sued in each complaint.
Up 4% from a year earlier, 6,185 patent lawsuits were filed in federal courts in the year ended March 31, 2014, according to the Administrative Office of the U.S. Courts. In the year before, the number grew 33.7%, from 14.8% a year earlier, 33.8% before that and 3.4% prior. Patent litigation has more than doubled from the 2,796 cases filed six years ago.