The signs are clear that so-called "patent trolls," companies that do nothing but threaten and litigate over patents, are doing serious damage to the economy. After more than a decade in which patent abuse has shot up to new heights, the problem has finally reached the attention of President Obama himself.

Today, the White House released a memo detailing seven legislative actions it wants Congress to take; several of them could have a real impact on patent trolls. The administration is also going to take immediate executive actions, including "empowering downstream users" by having the US Patent and Trademark Office (PTO) create a website to tell patent troll victims about their rights.

The memo outlines changes to bring much more transparency to patent disputes, including new PTO rules that will require patent owners to keep their ownership information updated. It asks Congress to impose similar transparency rules on courts. If that happens in an effective way, it could stop patent trolls from hiding their owners in the shadows behind networks of shell companies.

The letter's tone sends its own message. It unapologetically uses the tech-colloquial term "patent trolls," noting that they are "increasingly targeting Main Street retailers, consumers, and other end-users of products." The executive actions section promises to "tighten functional claiming," saying that overly broad claims "particularly in the context of software," are a serious problem.

A permanent solution to patent trolling is going to require action by Congress. Even if all of the Obama Administration's suggested reforms were enacted—hard to imagine considering the level of Congressional gridlock in the past few years—it won't totally wipe out the problem. But there's little question that these ideas—especially fee-shifting, transparency, and protection for end users—would make a major dent.

Losing plaintiffs should pay up, and users should be protected

Some highlights from the report include:

Transparency: parties should disclose the "real-party-in-interest" in both lawsuits and patent demand letters. And the demand letters should be public.

The true owners of patents often hide behind a "shell" company, often an oddly named LLC set up just to hold the profits from patent settlements. A change like this wouldn't necessarily reveal the names of who's getting the money in some "troll" situations. For example, the recent wave of scanner-troll letters that went out demanding $1,000 per worker don't identify who owns the patent-trolling company, which is named MPHJ Technology Investments. US corporate secrecy laws won't change any time soon, so the owner of MPHJ will continue collecting his or her checks in secret.

But increased transparency could make a huge difference, especially in identifying the kinds of large patent-holding companies that cut deals with different inventors and shell companies. Intellectual Ventures, for example, often "divests" itself of patents that are then used in litigation. But it isn't clear—and Intellectual Ventures won't disclose—how much profit it reaps from those lawsuits.

It would also help point out which corporations are engaged in the kind of corporate "profiteering" that has increasingly becoming the norm. (British Telecom's privateering against Google caused the search company to eventually punch back, but that's just one example of many.)

And in the "good news for tech law reporters" section, the White House wants patent demand letters to be made public. "Incentiv[ize] public filing of demand letters in a way that makes them accessible and searchable to the public," states the memo. As someone who has received and published redacted demand letters from very scared defendants, this would make a big difference in catching the real stories of patent abuse that are out there.

Protect end users using "off-the-shelf" products.

In recent years, widespread patent demands have been made against small businesses just for using everyday technology products as they were intended. Innovatio sued coffee shops and small hotels for offering Wi-Fi to their customers, and the above-mentioned scanner trolls at MPHJ have been called out by reformers on Capitol Hill.

The president's proposal says users should get "better legal protection against liability," but it isn't too specific about how to do that. It does say a suit against an end user should be stayed when a manufacturer or retailer is already fighting the case. Conceptually, this point seems to take to heart the idea that patent trolls should think about "pick[ing] on someone your own size," a point made by the Electronic Frontier Foundation (EFF) a few weeks ago. "The law should not allow trolls to prey on end users," wrote EFF lawyer Julie Samuels. "Period."

Make it easier for defendant companies that win patent suits to get attorneys' fees.

Without adding much detail, the memo suggests patent cases should be more like copyright cases, where it's much easier for defendants to get attorneys' fees paid when they defeat an infringement allegation.

Other suggestions in the memo include expanding the ability to challenge business method patents at the Patent Office and tightening up when the International Trade Commission (ITC) can issue injunctions.

Executive actions: Small but immediate

This year seems ripe for passing some of those reforms. Many of them echo already-introduced bills; indeed, 2013 has seen an extraordinary wave of five bills related to fighting patent trolls. For instance, the transparency point has been made by Sen. Ted Deutch (D-FL) in his bill, and Sen. Chuck Schumer (D-NY) has already called for new ways to fight patents at the PTO.

There are also five areas where President Obama is making changes immediately by taking executive actions. Most extraordinarily, he's asking the US Patent and Trademark Office—the very office that has become so easy to manipulate that it hands out hundreds of patents (at least) to bona fide trolls every year—to publish an FAQ for businesses attacked by trolls. The memo states:

End-users should not be subject to lawsuits for simply using a product as intended and need an easier way to know their rights before entering into costly litigation or settlement. The PTO will publish new education and outreach materials, including an accessible, plain-English web site offering answers to common questions by those facing demands from a possible troll.

Other areas of executive action include training PTO examiners to limit the "functional claiming" that's common in software, requiring the PTO to immediately start making rules about disclosing "real-party-in-interest," limiting ITC exclusion orders, and creating more outreach and study.

A report that gets it

The more extensive 15-page report hits a number of key points that technology companies have been complaining about for years. It cites recent research from reform-minded academics whose work has also been noted at Ars Technica, including Colleen Chien, James Bessen and Michael Meurer. It cites two Ars Technica stories investigating patent trolls that attacked big retailers and small businesses.

Overall, the report shows that (at long last) the highest levels of government have become aware of the patent problem. The report opens by mentioning characteristics of the "patent assertion entity" (PAE) business model, using straightforward language that evinces real understanding of the problem:

They [patent assertion entities] do not “practice” their patents; that is, they do not do research or develop any technology or products related to their patents; They do not help with “technology transfer” (the process of translating the patent language into a usable product or process); They often wait until after industry participants have made irreversible investments before asserting their claims; They acquire patents solely for the purpose of extracting payments from alleged infringers; Their strategies for litigation take advantage of their non-practicing status, which makes them invulnerable to counter-claims of patent infringement; They acquire patents whose claim boundaries are unclear, and then (with little specific evidence of infringement) ask many companies at once for moderate license fees, assuming that some will settle instead of risking a costly and uncertain trial; They may hide their identity by creating numerous shell companies and requiring those who settle to sign non-disclosure agreements, making it difficult for defendants to form common defensive strategies (for example, by sharing legal fees rather than settling individually).

The report offers the widely cited figure that patent trolls have cost $29 billion in direct annual costs, with less than 25 percent of that money going "back to innovation." It notes that PAEs now account for 60 percent of all patent lawsuits (a number derived from Colleen Chien's research, which uses a conservative definition of "troll.")

It will be interesting to see what kind of pushback comes from this report. The President responded to a question about patent trolls in a recent Google+ hangout and said that their "extortion" is a real problem. But now we know it's not just an offhanded remark—he's devoting staff and attention to this $29 billion problem.