The Executive Branch has undertaken a number of initiatives to identify solutions to the US patent problems.  One of the (obvious) focuses is on patent  trolls – DOJ/FTC PAE Seminar.  One of the newest initiatives is the possibility of a patent small claims court.  Last month, the PTO sought public comment on the potential value of a patent small claims court.  A small claims court focuses a number of significant hurdles (likely why it never got traction when it was considered twenty years ago):

  • To be cost effective, there could not be a jury, raising 7th amendment implications.
  • Would appeals go to the Federal Circuit or the district court?  Either run the risk of increasing the costs and swallowing the cost-savings of a small claims court.
  • How are damages limits set to encourage participation without allowing plaintiffs to easily avoid small claims?
  • Limiting discovery to generate the necessary cost savings and speed to resolution.
  • Does the small claims court reside in the already overburdened district courts, presided over by already overburdened magistrate judges?  Or does the small claims court reside in the already overburdened PTO?

Putting aside the procedural complexities, the big question for retailers is whether a patent small claims court would help solve their patent troll problem.  The answer is not perfectly clear, but there is promise in the idea:

  • It could significantly reduce both discovery and trial costs – the two largest costs in patent litigation.
  • The average time to trial could be reduced by years.
  • Reduced cost and reduced time to resolution – presumably following from reduced time to trial – reduces retailers’ risk.
  • Reduced risk levels the playing field and allows retailers to make business decisions based more on a cases’ merits than on just the cost of defense.

The reduced costs/risks are attractive.  But what any retailer really wants is a solution to the problem, not just a reduction in its size.  That raises the issue that legal answers cannot adequately resolve market–based problems, even if they can reduce them.