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Obama says patent reform needs to go farther

U.S. President Barack Obama delivers remarks on education for young children in Decatur, Georgia, February 14, 2013. REUTERS/Jason Reed
U.S. President Barack Obama delivers remarks on education for young children in Decatur, Georgia, February 14, 2013. REUTERS/Jason Reed

WASHINGTON (Reuters) - President Barack Obama, in an unusual foray into patent law, on Thursday said U.S. patent reform needs to go farther to address the trend of companies that do not manufacture any products aggressively suing other companies for patent infringement.

High-tech companies in particular have complained to regulators about big patent licensing companies that manufacture nothing but sue long lists of firms, often using weak patents to do so. Many high-tech firms settle to avoid litigation risk but some, like Google, fight back.

The polite term for these firms is "non-practicing entities" but in private they are more rudely called "patent trolls."

After a years-long fight, Congress passed a patent reform in 2011 which did little to address the issue.

"Our efforts at patent reform only went halfway to the point where they need to go," said Obama during an online question and answer session, calling for "smarter patent laws."

Long focused on large corporations because of their deep pockets, these entities have recently turned their attention to start-ups which are not as established but have raised large amounts of money and often have substantial revenue.

"I'm an ardent believer that what's powerful about the Internet is its openness and the capacity for people to get out there and just introduce a new idea with low barriers to entry," Obama said. "We also want to make sure that people's intellectual property is protected."

The increase in patent lawsuits by these companies is so pronounced that they now constitute the majority of U.S. patent lawsuits, according to a study by Colleen Chien, a law professor at Santa Clara University and a patent expert.

She found that about 61 percent of all patent lawsuits filed through December 1, were brought by patent-assertion entities, or individuals and companies that work aggressively and opportunistically to assert patents as a business model. That compares with 45 percent in 2011 and 23 percent five years ago.

These firms are asserting patents that were either originally awarded to them or that they acquired.

(Reporting By Diane Bartz; Editing by Cynthia Osterman)

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