Seton Motley | Less Government | LessGovernment.org

It’s Always Opposite Day in DC

Under consideration in Washington, D.C. is legislation that will fundamentally transform our patent system. It will render this Constitutionally protected intellectual property product – dramatically less protected. The bills to which I refer are the Innovation Act (House) and the Patent Act (Senate). There are many, many reasons to oppose them.

The reason given for why this legislation is allegedly necessary is to undo the “patent troll.” Their definition: Patent “trolls” are abusing ridiculously broad patents to shotgun lawsuit letters all over the place. Demanding money for the use of their ridiculous patents – or they’ll sue. Our definition: Their definition misses several important things. Let’s look at but a few.

If a patent is ridiculously broad – but approved by the United States Patent and Trademark Office (USPTO) – it’s a legal patent. On which lawsuits can be based. Undermining patent protection in response to this is like responding to a guy robbing stores by forcing store owners to remove the locks from their doors. The problem is government. Fix how the government approves patents – and craft a better way to review the ridiculous patents in circulation.

Because patent “trolls” are suing, this terrible legislation is being pitched as “lawsuit reform.” (At least) two problems here. One: Many, many legitimate patent holders – in possession of legitimate, rightly-approved patents – have to sue to protect their property from thieves. Legislation delineating between these two groups – the legit patent holders and the “trolls” – is micro-surgery. Government doesn’t do micro-surgery – it slams with hammers. In trying to address the “troll” subset, DC is poised to bludgeon the entire patent system.

These “reformers” are also considering another really, REALLY TERRIBLE idea. That sets the stage for near-limitless government-caused damage to not just patents – but the entire private economy. Via, in large part, an explosion in the number of subsequent lawsuits – exactly the opposite of the “reformers’” intended outcome. They want to “pierce the corporate veil.”

(A) legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders. Usually a corporation is treated as a separate legal person, which is solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed. Common law countries usually uphold this principle of separate personhood….

So why is DC looking to end this protection?

One of the discussion points about the new PATENT Act reform proposal making the rounds is the “reach through” that pierces the corporate veil for those entities….I’m left scratching my head and wondering whether this is where we want to make our stand, heading down the slippery slope of corporate veil piercing….

And it is indeed a very slippery slope. If government shreds the corporate veil here – the precedent is set. Of COURSE the Democrat Party – an operational partner of the trail lawyers bar – will seize on it to dismantle this lawsuit bulwark everywhere they can.

Which yet again begs the question: Why are Republicans giving Democrats this litigious impetus? And doing so in the name of “lawsuit reform?” Unless by “reform” they mean exponentially increasing the number of lawsuits to come. Which seems to not be what they have in mind. We certainly hope it isn’t, anyway.

This first appeared in Red State.