Despite rancorous dialogue between Democrats and Republicans on issues like immigration and the minimum wage, there is one topic attracting bipartisan support: patent reform. Last December, the House of Representatives passed a bill created by Rob Goodlatte (R, VA-6) that would amend portions of the America Invents Act. The proffered amendments specifically target the practice of “patent trolling.” Although the House version easily passed 325-91, some concerns linger. A senate version sponsored by Sen. Patrick Leahy (D-VT) is receiving support and differs from the Goodlatte version in several key areas.
Before getting into the nitty gritty of these two bills, it’s important to define just what patent trolling is. Patent trolling occurs when a business purchases a single or multiple patents without intent to market or manufacture the patent in commerce. Rather, these businesses sit on patents and sue any individual that infringes upon them. Defendants often prefer to refrain from lengthy courtroom battles that can cost millions to litigate. They prefer to simply pay a licensing fee to “patent trolls,” a less expensive (but obnoxious) alternative.
The problem with patent trolling is that it hinders innovation. The government provides patents as a means of encouraging individuals and businesses to invest resources toward innovation and development. The establishment of an innovative product comes with the reward and advantage of a 20-year monopoly. Only the inventor can market and manufacture his protected idea. The goal is not the patent in and of itself but the commercial value of the idea represented by the patent. The process of obtaining a patent is time-consuming and expensive, and patent trolls make this process harder by forcing innovators to pay even more fees to market their invention.
Goodlatte’s bill is seen as a step in the right direction. The bill sets up several roadblocks against nuisance suits by patent trolls without unnecessarily injuring valid patent claims. At the outset, the bill establishes a heightened pleadings standard. Currently, patent troll claimants need only provide a generalized claim. The Goodlatte bill demands that claimants do their homework before filing a claim. What aspects of the defendant’s patent infringe upon yours? What function, apparatus, or feature specifically are you citing? This information is incredibly valuable online casino to defendants. It gives them a clearer idea of what they may face should they further pursue litigation.
The most important feature of the Goodlatte bill, however, is the introduction of a fee-shifting provision. If a patent troll brings a claim against an alleged infringer and loses, they would be responsible for the legal fees accrued by the defendant. This accomplishes three things: first, it makes the decision to sue for patent trolls riskier. If they tussle with the wrong defendant — somebody who believes they’re being targeted with a nuisance suit — the potential for paying big increases. Second, fee-shifting penalties allow defendants who receive frivolous cease and desist letters to aggressively defend their patents. Third, the fee-shifting penalty is not overly burdensome. Plaintiffs with valid patent infringement claims will not be dissuaded from pursuing their rights.
The Leahy bill, by contrast, is considered less aggressive than the Goodlatte bill in its treatment of patent trolls. Although both bills require a heightened pleadings standard, the Leahy bill does not contain the fee-shifting provision. Instead, the Leahy bill targets the first action patent trolls use: the cease and desist letter. It allows the Federal Trade Commission to treat frivolous cease and desists letters as “an unfair or deceptive act or practice,” creating liability for would-be patent trolls. The bill also supplies small businesses accused of infringement with more resources and sets aside funds for the US Patent and Trademark Office to conduct further studies. Still, the absence of a fee-shifting provision remains a weakness to many observers.
Despite the laudits of big tech companies like Apple and Google, as well as small business owners, neither the Leahy nor Goodlatte bills will completely eradicate the problem of patent trolling. Trolls come in two varieties: small and big. While both congressional bills do a good job at stymieing smaller patent trolls, larger companies like IP Nav and Intellectual Ventures will most likely continue to operate. These larger corporations spend millions researching and obtaining high-value patents that can successfully be litigated at trial. Neither seems to be overly concerned with the new litigation.
The Goodlatte and Leahy bills are not perfect, but both represent positive steps forward in the right direction on an important issue. Whatever President Obama signs into law should curb patent trolling and prevent nuisance lawsuits. Finally, this issue seems to provide some evidence — albeit slim — that bipartisanship may yet be revivable on Capitol Hill.
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