This post is one in a series of reports on significant issues for startups in 2014. In the past year, the startup community's voice helped drive notable debates in tech and entrepreneurship policy, but many of the tech world's policy goals in 2014, from net neutrality to patent reform, remain unfulfilled. Stay tuned for more year-end updates and continue to watch this space in 2015 as we follow the policy issues most affecting the startup community.
Patent reform—a highly technical and wonky area of the law—is having a moment. A long-overdue moment. While we didn’t accomplish our primary goal in 2014, namely, passing patent reform legislation that would fix a dangerous and expensive patent troll problem, we did make important strides toward leveling a playing field that had been, up until recently, completely skewed in favor of incumbent industries.
In fact, 2014 saw some really important changes to the U.S. patent laws, pretty much all of which benefitted the startup community. For instance, the Supreme Court has been very active in patent reform—issuing six unanimous rulings last year, each of which came down in favor of the tech industry and/or patent reformers. The most important of those was a case called Alice v. CLS Bank, in which the Court tightened the definition over what can and can’t be patented, which has already resulted in fewer bad patents. This is good news, because a low-quality patent is one of a troll’s favorite weapons.
Even more, 20+ states have taken on patent trolls and the FTC continues to investigate the issue as well. Which is why we’ve argued that, despite the hold-up on Capitol Hill, our community is actually winning the patent reform debate.
That said, there is much work left to do. One of a troll’s favorite weapons might be low-quality patents, but the other is the outrageous cost of patent litigation. To fight a case to verdict can easily cost a defendant millions of dollars and can take years—resources unavailable to many startups and small inventors. This leaves a startup facing a patent threat with two really bad options: waste time and money in court, a terrible distraction from growing a business; or to settle, essentially paying the troll to go away and emboldening it to act again.
Which brings us to legislation. Only Congress and President Obama can fix the lopsided nature of patent litigation and create the proper incentives for troll targets to fight back. The good news is that bills in both the House and Senate appear poised to move in early 2015. Even better, the President has been very supportive of these efforts in the past. The bad news is that the usual opponents of reform—the ones who benefit from the status quo—are gearing up for a big fight.
We’re confident that the momentum gained in 2014 will help push patent reform over the finish line in 2015, but it will not be an easy fight. Continue to watch this space to learn how you can help join our efforts.
