Will the Senate Headbutt Patent Trolls Off the Bridge?
Everyone is talking about them. More than likely, you’ve heard the term yourself, buzzing in the media and on Capitol Hill: patent trolls. What usually follows is, “How do we stop them?” But what is a patent troll, anyway?
Patent trolls are often shells of companies that obtain patents, but don’t actually produce or sell anything; they get the patent just so they can obtain license fees. Recently, these entities have been abusing litigation tactics to claim patents, but only after the patented inventions have become widely used in the industry. They then begin demanding broad discovery requests to drive up litigation costs for their opponents, and end up remaining unexposed to counterclaims of patent infringement because they don’t actually produce or sell products. As a result, defendants have only two options: fight the case and rack up the huge fees, or settle.
In an effort to stop this from happening so often, H.R. 3309, simply called the Innovation Act, was introduced by Rep. Bob Goodlatte (R-Va.) in late October 2013. The bill, which has passed the House of Representatives and will be tackled in the next few weeks by the Senate, is a big step for patent reformers. If passed in its current form, the bill will add transparency to patent litigation and will require patent holders to show exactly who would be profiting if a lawsuit was brought. It would also allow lawsuits against customers to settle in certain circumstances, and would require fee shifting to the prevailing party in most patent cases – an amendment that was changed from its original “loser pays” system.
Representatives also chose to stop the bill from taking out an old, rarely used provision in patent law regarding patent applicants who can’t get their patents from the Patent Office, and their ability to sue for those patents in court.
Goodlatte opposed the amendment, but it passed with the support of other advocates.
Most importantly, the bill will add transparency to litigation, requiring proof of who truly owns patents involved in litigation and whether there are other parties who have financial interests in the patent lawsuit. Other provisions include joining other interest parties in a lawsuit, so that those who are making money off widespread patent litigation cannot hide behind the shell companies – forcing patent trolls and their smaller minions out into the open. If the Senate approves the bill, it will be a huge success for the patent field and smaller companies who were previously unable to defend themselves against larger companies.
All eyes now rest on the Senate in this modern day telling of the Three Billy Goats Gruff, where a troll threatens to eat a trio of goats but ends up being dumped into a river by the biggest of those goats. Will they headbutt the patent trolls back to their bridge with the Innovation Act? Stay tuned!
[This is an update from our coverage of this bill in early November, as new developments have occurred since that time.]