Make the Patent 'Polluters' Pay: Using Pigovian Fees to Curb Patent Abuse
California Law Review Circuit, Vol. 4, p. 84, 2013
9 Pages Posted: 11 Jun 2013 Last revised: 25 May 2014
Date Written: June 11, 2013
On the heels of a widely reported uptick in egregious patent enforcement, six patent reform bills have been introduced in the last six months. All six bills aim to curb nuisance-value patent litigation, a phenomenon popularly referred to as “patent trolling,” by reducing the cost of defending these suits. In this essay, we argue that these bills, while admirable, treat the symptoms of our patent system’s ills, rather than the disease itself: a growing glut of unused high-tech patents that have little practical value apart from use as vehicles for nuisance-value litigation. Accordingly, we urge Congress to consider one additional legislative fix: reforms to the way patent renewal (or “maintenance”) fees are calculated. Combining our own empirical research on the timing and costs of patent troll litigation with the concept of “Pigovian” taxation, we propose a new patent fee structure designed to induce the expiration of trivial patents before they wind up in the hands of bad actors. Doing so, we explain, would drive trolls out of business while sparing legitimate innovators from the same fate.
Keywords: patent troll, NPE, PAE, PME, patent reform, maintenance fees, Pigovian tax, patent fees
JEL Classification: O34, K41
Suggested Citation: Suggested Citation