Patent trolling, the practice of buying up patents to use for frivolous lawsuits against unsuspecting businesses, has exploded in recent years. To fix the problem, a bipartisan coalition led by Rep. Bob Goodlatte (R-VA), the chairman of the House Judiciary Committee, has introduced the Innovation Act of 2013, the first bill aimed at killing patent trolls that has a fighting chance of passing.
Patent trolls don’t actually create anything; they just buy patents to make claims of infringement. The frivolous lawsuits are expensive, and most defendants settle out-of-court rather than risk a drawn-out legal fight. The patents tend to be on software, and the patent trolls like to target small businesses like Internet Cafés, app developers and podcasters. A White House report said that lawsuits by patent trolls have cost $29 billion in 2011, a 400 percent increase from 2005, and found that it was stifling innovation.
In addition to small businesses, patent trolls have been known to attack large companies and even city governments.
The Innovation Act contains six key parts to battle patent trolls. The Electronic Frontier Foundation, which is encouraging people to express their support for the bill, laid out these six steps on its blog.
· Heightened Pleading: The bill requires patent holders to provide basic details (such as which patents and claims are at issue, as well as what products allegedly infringe and how) when it files a lawsuit.
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· Fee shifting: The bill allows for a court to require the loser in a patent case to pay the winning side's fees and costs. This makes it harder for trolls to use the extraordinary expense of patent litigation to force a settlement.
· Transparency: The bill includes strong language requiring patent trolls to reveal the parties that would actually benefit from the litigation (called the real party in interest). Also, if the plaintiff is a shell-company patent troll, the defendant could require the real party in interest to join the litigation, forcing them to pay up if the patent troll can’t or won't pay.
· Staying customer suits: The bill requires courts to stay patent litigation against customers (such as a café using an off-the-shelf router to provide Wi-Fi) when there is parallel litigation against the manufacturer.
· Discovery reform: The bill shuts down expensive and often harassing discovery until the court has interpreted the patent, making it easier for defendants to dispose of frivolous cases early before the legal fees and court costs really add up.
· Post-grant review: The bill expands an important avenue to challenge a patent's validity at the Patent Office (known as the transitional program for covered business method patents).
The coalition supporting the Innovation Act is made up of Reps. Zoe Lofgren (D-CA), Spencer Bachus (R-AL), Jason Chaffetz (R-UT), Howard Coble (R-NC), Peter Defazio (D-OR), Anna Eshoo (D-CA), Blake Farenthold (R-TX), Lamar Smith (R-TX), Tom Marino (R-PA), and George Holding (R-GA).
Other bills aimed at handling patent trolls have been introduced in the past, but the bipartisan support for the Innovation Act gives this bill a real chance of passing. A hearing on patent reform next week will determine when voting for the bill will take place.