Congress Needs to Rein in ‘Patent Trolls,’ Senate Antitrust’s Lee Says
Congress needs to institute further reforms to U.S. patent law to address the problems posed by patent litigation abuse, and particularly the rise of rogue non-practicing entities often referred to as “patent trolls,” said Senate Antitrust Subcommittee Ranking Member Mike Lee, R-Utah. “Ours should be a system in which true innovators do not bear the cost, or at least the full cost, of excessive and ultimately unsuccessful patent assertions,” he said at a Computer & Communications Industry Association event Thursday. “It ought, I think, to be a system characterized by transparency, providing notice both of the invention and the real-party-in-interest who owns it. And more broadly, we should seek to help ensure that our patents are of the highest quality so that opportunistic actors are not able to abuse the system and strategically assert vaguely-worded patents that should never have been issued in the first place.”
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Reps. Jason Chaffetz, R-Utah, and Peter DeFazio, D-Ore., reintroduced the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act Wednesday. They originally introduced the bill in August, but it failed to make it out of the House Judiciary Committee (WID Feb 28 p6). The SHIELD Act would force any plaintiff who the court designates as a “patent troll” to pay all costs and attorney’s fees associated with a patent infringement lawsuit if the plaintiff loses the case, according to an information sheet issued by Chaffetz and DeFazio. The patent owner would be exempt from paying costs if the owner is the inventor or original patent assignee, if the owner is a university or technology transfer organization, or if the owner made a “substantial” investment in using the patent in a produced item.
The bill faces better odds now that the House Judiciary Committee has been able to take a break after “slogging through the [America Invents Act] for years,” DeFazio said during the CCIA event. The committee will hold hearings “in the near future” on patent trolls, he said. DeFazio said he hopes the committee will consider the SHIELD Act following those hearings.
The Intellectual Property Owners Association (IPO) will need time to study the bill, IPO Executive Director Herb Wamsley said late Wednesday in a statement. “IPO believes intellectual property systems should apply without discrimination to all industries and all technologies, so Mr. DeFazio’s new bill could be an improvement over the bill introduced last year."
Industry representatives at the event said they supported the SHIELD Act. The bill attempts to “balance the scale” so patent litigation is no longer a “no-risk game” for patent trolls, said Seth Brown, LivingSocial’s head of litigation. LivingSocial faces six lawsuits brought by plaintiffs it considers to be patent trolls, he said. Those suits force LivingSocial to pull senior staff off their work to speak with lawyers -- a drain on costs, time and morale, Brown said. Patent litigation abuse has also forced software companies into an “arms race” to patent any innovation they believe a patent troll might attempt to litigate just to protect them, he said.
While the America Invents Act was an important step in fixing the problem, more action is needed -- and the SHIELD Act will be “critically important,” said Tim Sparapani, Application Developers Alliance vice president-law, policy and government relations. “We need reform now.” He said that abusive litigation brought by patent trolls is a “cancer on the growth of America’s businesses."
Getting legislation on a problem as complicated as patent litigation abuse is going to be difficult, said Rackspace General Counsel Alan Schoenbaum. But the final version of the SHIELD Act does not need to be perfect, he said. “Perfect is the enemy of the good.”