December 06, 2013

Innovation Act from US House Looks to Defang Patent Trolls


When it comes to technology, one of the scariest acronyms a lot of companies face is NPE, Non-Practicing Entity, otherwise known by its much more disdainful name, the patent troll. While such entities have risen more than a little havoc in the past, a new bill just out of the U.S. House of Representatives seeks to take a bite out of this particular practice. Dubbed the Innovation Act, it cleared the House in a vote of 325 – 91, and is set to make its way to the Senate Judiciary Committee, which is set for a hearing on the bill December 17.

H.R. 3309, the more formal name for the Innovation Act, seeks to establish a new set of requirements that plaintiffs would need to meet before being able to file lawsuits alleging patent infringement. Plaintiffs would have to, under the terms of the Act, offer up more information about patents that have been allegedly violated, including the true identity of the patent holder. Core documents would be the only ones available for use in discovery, which in turn shifts financial burdens for discovery to the plaintiff rather than the defendant. Further fee shifting is also part of the Act, as courts would have the ability to award attorney's fees and the like to the party that prevails in the case should the case not be found legally justified. Should the party assessed said fees not be able to pay, the court could then make the fees recoverable against other parties who joined the case.

The bill's sponsor, Rep. Bob Goodlatte (R-Va.) described the need for the bill's existence with some remarks: “The tens of billions of dollars spent on settlements and litigation expenses associated with abusive patent suits represent truly wasted capital. The patent system was never intended to be a playground for litigation extortion and frivolous claims.”

However, there are those who opposed the bill, and not strictly those on the opposite side of the aisle from Goodlatte. Rep. Dana Rohrabacher (R-Calif.) weighed in with something of the opposition's commentary, saying “Every time you hear the word 'troll,' what you're hearing is a manipulation of this debate by some very special interests, powerful interest, who want to steal from the independent inventor.”

The problem with this issue, of course, is that both sides have a good point. Indeed, there are plenty of stories out there of patent trolls landing with both feet on the neck of a business, and not just some massive faceless corporation, either, but even smaller businesses who had a good product but got socked in the teeth by some patent troll out of nowhere. Yet by like token, who doesn't remember the 2008 movie “Flash of Genius,” detailing how small inventor Robert Kearns created the alternating windshield wiper but nearly lost it all in protecting his invention?  No one wants to see another Robert Kearns scrapping away at Ford in a bid to get due credit--and compensation--for his idea.

Now the problem becomes one of how to protect inventors from losing patent rights in the face of entities that can win virtually any legal challenge by sheer attrition while at the same time allowing companies to proceed with the kind of vital work that keeps new products coming out, new services becoming available, and the economy as a whole moving forward. This is not an easy problem to solve, really, and only time will tell just how well the Innovation Act actually works to protect innovation.




Edited by Stefania Viscusi



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