2005: YEAR OF THE TROLL - This was the year that patent holding companies truly arrived. While many other issues in patent law were closely watched by lawyers, journalists and bloggers, nothing attracted more attention than the latest showdown between established corporations and a patent holding company.

In a sense, holding companies have done for patents what blogging has done for news distribution - it has empowered "ordinary" individuals to tread into areas that were previously dominated by institutional entities. Some people have embraced this evolution, some are uncomfortable with it (but have resigned themselves to this reality), and many others have decried or dismissed it.

Whatever your view is, holding companies have demonstrated that patent rights, in and of themselves, and extermely powerful and can bring tremedous benefit or catastrophic ruin. Companies and patent holders that are able to successfully harness the power of their portfolios will continue to tap into additional revenue streams and gain access to other technological markets that would not have been available without the backing of patents. And this year, a lot of companies have shown that developing such strategies are possible for any company, regardless of the size or the industry. Even some big-named businesspersons (e.g. Myhrvold, Perot) has jumped on the bandwagon and started enterprises that borrow heavily from the holding company playbook.

Alas, there are significant problems that holding companies have brought to the forefront. There is no denying that current means of patent enforcement are strongly skewed in the favor of the patent holder. The current cost of litigation almost prohibits smaller companies from challenging a patent plaintiff, and almost guarantee that larger companies will settle in lieu of engaging in a proactive defense. To its credit, the government has been attempting to address these problems by introducing significant patent reform, but there are some troubling aspects in the proposed legislation (e.g., first-to-file, redefining prior art), and it remains unclear which parts will survive when the legislation works its way through Congress.

Also, the issue of patent quality and prior art need to be addressed more seriously. While there always have been (and always will be) "bad patents," the USPTO has to take a more proactive role in searching and applying prior art, especially art that is found in non-patent literature. While there is a conventional wisdom to view every patent being asserted by a holding company as a "bad" patent, this is not typically the case in reality. Nevertheless, there are a few cases where lapses by USPTO personnel have ended up costing others millions of dollars in defending themselves against poorly examined patents. This simply has to stop.

In the coming year, the 271 Patent Blog will continue to provide you with the best available information on patents and patent law, and will try to provide you with the most straightforward analysis on developing trends. 2006 is shaping up to be a groundbreaking year for patent practice - make sure you stay informed every step of the way.

HAPPY NEW YEAR!