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Demand Letter Aid Website Announced by White House

Feb. 20 (Bloomberg) -- Consumers and businesses hit with demands to pay royalties for such common technology as sending scanned documents by e-mail or accessing Wi-Fi hotspots could get help from the U.S. government on how to respond.

The U.S. Patent and Trademark Office is setting up a website with advice for anyone accused of patent infringement, according to a White House statement in advance of an event today on how to “strengthen our patent system and foster innovation.” The goal is to blunt a favored weapon of some patent owners who claim rights to ubiquitous technology and send letters seeking royalties from anyone who uses it.

It’s part of a broader initiative by President Barack Obama to alter practices at the patent office, so it issues fewer patents that are so unclear that their owners can claim just about anyone is infringing them. Examiners will get more training, and businesses will be asked to provide more technical information that can be used in analyzing applications.

“For years these trolls have extorted payments from small businesses and held back the growth of our economy, but those easy paydays must come to an end,” Gary Shapiro, president of the Consumer Electronics Association said in a statement, using a pejorative for those who buy patents solely to seek royalties.

Loser Pays

The challenge for Obama is finding a balance between curbing litigation abuses and ensuring patent owners can protect their inventions from knockoff competition or unauthorized use. Companies that are frequently sued, such as Google Inc. and Cisco Systems Inc., back legislative change. Those that generate revenue by licensing their patents, such as Qualcomm Inc. and Dolby Laboratories Inc., oppose it.

Congress is considering legislation to limit lawsuits that target the users of technology, force the loser to pay the winner’s legal fees in some cases and require patent owners to more clearly define their case against accused infringers earlier in the process. The House passed a measure in December and the Senate is considering various proposals.

The U.S. Supreme Court will hear arguments next week on when patent holders should pay the winning side’s legal fees, and will consider a case on how to determine what type of software is eligible for patent protection.

Demand Letters

The PTO issued 302,948 patents last year and receives more than 500,000 new applications annually. The White House initiative focuses on reducing the number of patents of questionable validity and providing practical advice to the public. In addition to basic information, the website provides a database that can help the letter recipients learn more about the patent owners.

A recipient of a demand letter or lawsuit can put in the name of the patent owner, the patent number and even the law firm to find out whether the patent’s ever been the source of previous litigation and, if so, the outcome, according to Lex Machina, a legal analysis company that’s providing the database tools.

“It gives you a general overview of who is it who sent you this demand letter and what it is all about,” said Karl Harris, vice president of products at Menlo Park, California-based Lex Machina. “Nobody has a finger on the pulse on what’s in those demand letters, like who’s getting them. We can be a repository to understand what’s going on before patent litigation hits trial.”

Microsoft Documents

Microsoft Corp., the world’s largest software maker, said it will make more than 10 million technical documents available to examiners by May and already posts a searchable database of its 37,000 issued patents.

“The USPTO reviews thousands of applications, and part of that review includes a search to see if the idea is truly novel,” Horacio Gutierrez, Microsoft’s head of intellectual property, said in a blog posting. “Right now, though, the USPTO lacks easy access to an enormous amount of this ‘prior art’ information, some of which exists only on paper and optical media filed in libraries and corporate archives.”

Independent inventors will get more legal assistance under another initiative, and the administration renewed its support for an awards program to promote patents that address global humanitarian needs.

The initiatives don’t include the administration nominating a director for the patent office, which has been without a leader for more than a year. Former Google executive Michelle Lee was appointed deputy director and is acting chief. Her appointment, unlike the director position, didn’t require Senate confirmation.

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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