Epstein on "Patent Reform Gone Wild"

Patent Reform Gone Wild
Richard A. Epstein
March 4, 2014

It is a common insight that no system of civil procedure can be perfect.  Make the requirements to maintain a lawsuit too lax and you'll invite too many speculative or abusive law suits. Make the pleading rules too tight and many meritorious claims will find themselves kept out of the courts. In all cases, getting the right balance is equal parts art and science. In dealing with well-established legal practices, the proper approach is generally to enact legal change only incrementally unless there is strong proof of some wholesale breakdown of the system.

The Senate is currently considering a bill (the Transparency in Assertion of Patents Act) that violates that maxim in patent cases. Ostensibly designed to the curb the influence of "patent trolls" — those companies that, according to the bill's sponsor, Senator Claire McCaskill, "buy patents, but then fail to actually produce goods or services, opting instead to intimidate or sue other small businesses" — this piece of legislation defines its ambitious goal as: “To curb unfair and deceptive practices during assertion of patents, and for other purposes.”  This is not a novel goal. But the means offered to achieve those end are nothing short of revolutionary—and unwise. In the effort to control those unidentified trolls, her legislations threatens to wreck the current procedural system.

The proposed legislation makes grievous errors in two critical areas. The first is its wholesale alteration of the pleading rules under the Federal Rules of Civil Procedure. The second is the massive overkill that it embraces with respect to public enforcement of the new rules by a combination of actions through the Federal Trade Commission and the Attorney Generals in all 50 states. It is worth explicating both points.

Richard A. Epstein