Continuing our generation's patent reform debate, the US House of Representatives last month introduced the Innovation Act of 2013, a bill intended to discourage patent assertion entities (PAEs) from pursuing egregious infringement lawsuits. These PAEs—often referred to as "trolls"—are patent-licensing companies that make much of their money by threatening manufacturers, service providers, and end-users with legal action based on patents that the PAE has purchased. The trolls hope that the high cost of litigation will be enough to scare the defendants into settling out of court. Drawing on provisions from earlier bills, the Innovation Act requires that plaintiffs clearly define their cases--potentially even before any discovery would be allowed. Such definition includes itemizing the specific patents and claims allegedly infringed, thus thwarting attempts to file broad, sweeping claims. Full disclosure of all financially-interested parties is also a prerequisite for a patent lawsuit.The new legislation, sponsored by Representative Bob Goodlatte (R-VA), chairman of the House Judiciary Committee, has support from both sides of the aisle, as well as from the President himself. Earlier this year, the White House issued numerous executive orders and legislative recommendations in an effort to curtail the kind of frivolous lawsuits that many say are draining our economy of both financial and innovative resources and are undermining the public's trust in the patent system altogether.
Only time will tell whether this crackdown will really serve as a deterrent for those looking to abuse the patent system. Will the additional barriers placed between litigious PAEs and their targets be enough, or will the new complexities of patent laws—and the attendant higher costs of litigation—only serve to bolster the economic threat that these trolls can hang over the heads of the operating companies? And how will the extra hurdles in the patent application and protection process affect smaller companies whose growth often depends upon those patents? This legislation has the potential to be the bridge over troubled waters for startups and small businesses…or more ammunition for the trolls sitting beneath that very bridge.
Only time will tell whether this crackdown will really serve as a deterrent for those looking to abuse the patent system. Will the additional barriers placed between litigious PAEs and their targets be enough, or will the new complexities of patent laws—and the attendant higher costs of litigation—only serve to bolster the economic threat that these trolls can hang over the heads of the operating companies? And how will the extra hurdles in the patent application and protection process affect smaller companies whose growth often depends upon those patents? This legislation has the potential to be the bridge over troubled waters for startups and small businesses…or more ammunition for the trolls sitting beneath that very bridge.