Business Booming for 'Litigation Factories' That Abuse Patent System, Says Cisco's Legal Point Man

It’s big business for “litigation factories that take advantages of anomalies in the patent system to extort financial settlements out of businesses large and small,” said Cisco General Counsel Mark Chandler Tuesday in a blog post on the formation last week of the United for Patent Reform. Cisco is a charter member (see 1501150035). United for Patent Reform is “a broad-based coalition of businesses” that will work “to fight wanton abuse of the patent litigation system by patent assertion entities (PAEs),” said Chandler. PAEs are companies that “neither invent nor produce products, but simply buy patents for litigation value,” he said. Citing Allied Security Trust data, Chandler said PAEs bought as many patents in the first half of 2014 as they did in all of 2013. The number of lawsuits brought by PAEs in 2014 were triple those of 2006, he said. “As our coalition’s membership illustrates, this is a problem that includes businesses of all shapes and sizes.” Among the congressional remedies the coalition seeks are measures that put the “burden of litigation costs on those who bring suits that prove to be for extortion value only or where parties demand inefficient, costly litigation procedures,” he said. “Over the next weeks and months, Cisco, in conjunction with United for Patent Reform and its member companies, will make the case for patent reform in the hope that Congress will approve meaningful reforms soon. This is imperative if we’re to break the outlandish and exploitive business model that has encouraged patent assertion entities to thrive.”