Why New Patent Law Will Do Little To Halt The Smartphone Litigation Frenzy

The Senate votes today on major changes to the U.S. patent system. The America Invents Act of 2011 is expected to pass and to be signed by President Obama in time for his jobs speech later this week. But while the bill brings major changes to patent law, it won’t do much to end the wave of litigation engulfing the mobile industry.

This week’s law comes after repeated efforts by Congress in the last decade to address a spike in undeserved patents and rise of “patent trolls” — shell companies that make their living through litigation. These patent problems have produced an explosion of litigation in the smartphone sector and a fear among app developers that they will be sued out of existence.

The problem has gotten so bad that in July, a group of UK app developers said they were bailing out of the American app market altogether due to the threat of lawsuits. But the extent of the problem became widely apparent as far back as 2007, when a blogger showed that Apple (NSDQ: AAPL), Google (NSDQ: GOOG) and 35 other major firms had been hit with more than 500 patent suits in just two years, and that the majority of those were brought by firms that did not make or sell any products.

In the short term, the America Invents Act won’t reduce the amount of litigation among mobile companies and patent trolls. The final version of the law drops earlier provisions that would have reigned in the out-sized jury awards that lead many companies to settle, and it does little to eliminate the proliferation of low-quality patents (the most infamous examples are for a crustless PBJ and a method for swinging on a swing.)

Still, there are a few bright spots in a law that experts describe as the most significant change to patent law in 60 years. First, the bill allows the patent office to keep most of the fees it collects, meaning it will have more time to scrutinize patent applications. Second, the new law makes it easier to challenge patents after they are granted.

These changes are good news, but they will largely only apply to new patents – they will not affect the thousands of dubious patents already out there that are driving many of the current lawsuits. (There is one narrow exception — thanks to Senator Charles Schumer, banks will be able to immediately nuke a patent related to check cashing technology).

In the near term, mobile players will have to continue to roll the dice in court until the current crop of bad patents are washed from the system.