Yet another patent reform bill hit the House of Representatives floor yesterday, but this one might actually pass.
The Innovation Act, sponsored by Rep. Bob Goodlatte (R-Va.) is a comprehensive bill aimed at neutralizing patent trolls.
The bill has six key parts, as outlined by the Electronic Frontier Foundation, which called it the “best patent troll-killing bill yet.”
First, it requires “heightened pleading,” meaning that patent holders are required to provide specific details when they file a lawsuit and be more transparent about who they are suing and why.
Secondly, it dictates that the loser in a patent case is required to pay the winning side’s fees and costs.
Patent trolls, formally known as “patent assertion entities,” are organizations that buy up patents, not to use them in business, but to file lawsuits against other companies that allegedly infringe upon them. The patents are often extremely vague and the suits frivolous, but defending a lawsuit in court is so expensive that companies will write settlement checks, regardless of the validity of the claims.
The Georgetown Law Journal said that in an estimated 90 percent of cases, the defendants settle before going to trial. However, software-patent holders win just 13 percent of their court cases, meaning if you go to trial, the odds are good.
This provision of the Innovation Act aims to encourage defendants to go to court against groundless claims, because they won’t have to bear the burden of the cost if they win.
The Innovation Act also requires patent trolls to reveal the parties that would actually benefit from the litigation, to prevent trolling for trolling’s sake.
Fourth, the bill lets manufacturers protect their customers from getting sued for patent infringement for using their technology. The bill also shuts down the “expensive and often harassing” discovery until the court has interpreted the patent.
Lastly, the “Covered Business Method” (CBM) program would make it easier to challenge a patent’s validity at the Patent Office. It gives the director of the patent office the power to waive fees for challenging patents and take a closer look at patents passed in the pre-reform days.
This would hopefully cut down on the number of low-quality patents.
Our patent system has issued “garbage patents” for years, which is part of why trolls are able to do what they do.
PAEs cost the U.S. economy an estimated $29 billion each year and create an climate that isn’t supportive of innovation and entrepreneurship. The issue has been growing over the past couple years and the government has begun to take action against the broken patent system.
Earlier this year, two members of the House of Representatives introduced the SHIELD Act to thwart patent trolls, and in early June President Obama released five executive orders and seven legislative recommendations aimed at reforming the patent industry. The FTC began an investigation into patent trolls in September, which was also a big step forward.
There is, of course, some dissension, particularly over the CBM program. The Business Software Alliance, which includes Oracle, Microsoft, and Apple as members opposes expanding the CBM program, although supports the bill in general.
Goodlatte is the chair of the House Judiciary Committee. The legislation is co-sponsored by Rep. Zoe Lofgren (D-Calif.), Rep. Howard Coble (R-N.C.) and Rep Peter DeFazio (D-Ore.).