PALO ALTO — Federal Circuit Chief Judge Randall Rader came to San Francisco last month, pitching patent lawyers to reduce the cost of patent litigation by scaling back their discovery demands.

On Friday, his Federal Circuit colleague Timothy Dyk came to Palo Alto with a different suggestion for reforming the patent system: more imaginative lawyering. The patent bar, Dyk said at a Stanford conference on patent reform, is “too timid and too lacking in creativity.”

He encouraged lawyers to advocate policy positions to the U.S. Court of Appeals for the Federal Circuit and the Supreme Court that “move the ball forward.” Many may get rejected, he said, but “there are in fact all sorts of things that need exploration.” More participation from organizations representing the public interest, such as the American Civil Liberties Union and the Electronic Frontier Foundation, could help bring fresh ideas and keep the patent community from becoming too “insular,” he said.

It was one of several prescriptions Dyk, a 2000 appointee of President Bill Clinton, offered for reforming what he said is sometimes a “dysfunctional” system. Reducing the U.S. Patent and Trademark Office’s backlog of 600,000 patent applications would be a good start, he said, though he acknowledged it will be difficult without compromising patent quality.

The PTO, he added, ought to be “given a role in formulating substantive patent policy,” with the courts deferring to its reasonable judgment as they would most other administrative agencies. He acknowledged it would be “somewhat controversial,” but noted the Supreme Court has criticized the Federal Circuit’s attempt at drawing bright-line rules. “The PTO, like any administrative agency, may be better equipped to do this,” he said.

Dyk also faulted his own court, which was established 30 years ago to bring clarity and uniformity to patent law. “That objective has not been achieved to the extent it needs to be,” he said. Dyk said he welcomed recent scrutiny from the Supreme Court. “Strangely enough,” he noted, “the involvement of the Supreme Court is not welcomed by the patent bar.” But the high court, he said, offers a broader perspective that can help combat “patent exceptionalism.”

Like Rader, Dyk identified litigation costs as a serious problem. But he didn’t ask the 100 or so patent litigators on hand for their help. “To be cynical, but also realistic, we’re not going to see much help from the patent bar in reducing these costs because the patent bar benefits from them,” he said.

Sandwiched around Dyk’s address were discussions of patent reform made especially lively by the inclusion of two prominent lawyers for nonpracticing entities—Intellectual Ventures Vice Chairman Peter Detkin and Matthew Powers of the Valley’s Tensegrity Law Group.

Detkin told the largely anti-NPE audience that IV has provided a public service by creating a secondary market for quality patents. That’s helped pave the way for transactions such as Lenovo’s $100 million purchase last week from Unwired Planet. UC-Hastings law professor Robin Feldman said the market IV has created is opaque and unregulated and, therefore, not nearly as helpful as it could be.

As for bottom-feeding NPEs shaking down small businesses for litigation costs, Detkin argued the same problem is endemic in insurance, securities and medical malpractice litigation. “I can’t help you with that, I’m sorry,” he said. The solution is for the PTO to crack down on poor quality patents, he said.

“I never though I’d hear myself say this,” Wilson Sonsini Goodrich & Rosati partner Stefani Shanberg said, “but I agree with Peter” on patent quality. But, she said, “that solution is going to take many, many lifetimes” and won’t help businesses that are getting shaken down now.

On a separate panel, Tensegrity’s Powers said it’s not clear that trolls are a serious problem. Companies are free to lobby against them “in their naked self-interest,” he said, but “I don’t think it ought to be cloaked in the guise of doing the Lord’s work.”

Weil, Gotshal & Manges partner Ed Reines replied that abusive NPE litigation is easy enough to spot from reading the docket sheets, and Santa Clara University law professor Brian Love said “studies and studies and studies” have shown NPEs bring most patent cases and lose 80 to 90 percent of them when they don’t settle. “My question to Matt would be, what else do you want to know?” he said.

“There are a lot of numbers being published by a lot of people, some of whom have their own agendas,” Powers replied.

“I have a feeling,” said Durie Tangri partner Daralyn Durie, “that on this panel my smart move might be to duck and cover.”

“Patent Trolls and Patent Reform” was cosponsored by the Stanford Program on Law, Science & Technology and Samsung Electronics and hosted by Stanford professor Mark Lemley.

Contact the reporter at sgraham@alm.com.