The U.S. patent system has long struggled to strike a balance that both encourages patent rights and prevents patent abuse. Finding that balance requires giving patent owners the right amount of patent enforcement power, while also giving accused patent infringers the right amount of power to defend against patents. When the patent system gives patent holders too much power, it can lead to a “patent holdup” — where patents, even weak ones, can be acquired and asserted for the sole purpose of extracting money from operating companies. Faced with a system tilted in the patent owner’s favor, accused infringers are often too frightened to put up a fight, thereby stifling innovation. But when the patent system gives patent holders too little power, it can lead to “efficient infringement”—where patents, even strong ones, are useless to discourage infringement because infringers view the cost and risk of continued infringement as preferable to acknowledging the patent owner’s rights.

Over the last several years, faced with the perception that frivolous patent lawsuits were creating a patent-holdup problem, lawmakers responded with legislation aimed at curbing meritless lawsuits. In parallel, several judicial decisions made enforcement of U.S. patents more challenging for patent owners. This combination of legislation and jurisprudence has led to concerns that the pendulum of U.S. patent rights has swung too far away from patent owners in favor of alleged patent infringers, leading to problems with efficient infringement. Recently, however, new case-law developments may indicate a shift back toward the center, perhaps signaling an appropriate balance between patent rights and the freedom to innovate...