The U.S. Supreme Court upheld an administrative review system that has helped Google Inc., Apple Inc. and other companies invalidate hundreds of issued patents.
The justices, voting 7-2, said Tuesday a U.S. Patent and Trademark Office review board that critics call a patent "death squad" wasn’t unconstitutionally wielding powers that belong to the courts.
Silicon Valley companies have used the system as a less-expensive way to ward off demands for royalties, particularly from patent owners derided as "trolls" because they don’t use their patents to make products. Drugmakers and independent inventors complain that it unfairly upends what they thought were established property rights.
“It came down to this: Is the patent office fixing its own mistakes or is the government taking property?” said Wayne Stacy, a patent lawyer with Baker Botts. “They came down on the side of the patent office fixing its own mistakes.”The huge body of ridiculous patents on file in the U.S. has been a huge problem in recent years, with patent trolls essentially building a lucrative extortion business out of a combination the failures of the Patent Office and the cost of the litigation required to redress them -- it was often cheaper to just pay the "ransom" than it was to fight to invalidate the junk patent itself. Now that the U.S. Patent Office can void their own patents without a judicial review, though, that changes, suddenly making patent trolling into a much riskier activity with a much lower change of profit.
Wall Street has already noticed, too:
The ruling caused shares to drop in companies whose main source of revenue -- their patents -- are under threat from challenges. VirnetX Holding Corp., which is trying to protect almost $1 billion in damages it won against Apple, dropped as much as 12 percent and closed down 8.5 percent. The patent office has said its patents are invalid in a case currently before an appeals court.It will be interesting to see just how much of an impact this ruling has, and how quickly. Patent and trademark law are byzantine enough at the best of times, especially in the U.S., and I can't help but feel that any ruling in favour of rational decision-making, which disadvantages deep-pocketed litigants in the process, can only be a good thing.