Innovation Act Proposed Again in an Attempt to Tame Patent Trolls

One of the underlying tensions in intellectual property law is the struggle between providing adequate protection for the owner while ensuring that the processes to get these protections are not so burdensome that they either deter the owner from seeking protection for his intellectual property or unnecessarily restrict his right to remedy. For some time, patent trolls were the clearly targeted enemy. However, the Innovation Act, recently making its second appearance in Congress, would broaden the protection for defendants in patent litigation by requiring the plaintiff to jump through more hoops in the litigation process. Introduced by House Judiciary Committee Chairman Bob Goodlatte (R., Va.), the bill was originally presented in 2013, passing the House by a 325-91 margin but was eventually blocked by the Senate.

While the bill appears on its face to address the problem of patent trolls and any other entities hoping to extort profits exclusively through litigation, the bill casts a wide net that arguably creates a prohibitively high burden on plaintiffs who rightfully deserve to bring suit against a patent infringer.

The bill addresses the currently low hurdle to initiating litigation. There is little to prevent parties from entering vague information to file claims or from sending deceptive demand letters to alleged infringers. Victims of abusive pre-litigation action often find themselves paying licensing fees to avoid lawsuits. End-users may even be forced to answer a claim of patent violation before the company has made the product. To address this issue, the Innovation Act proposes that plaintiffs seeking relief under patent-related congressional acts must include with each claim of patent infringement: the accused instrumentality, the alleged direct infringer, the principal business of the claimant, each complaint filed asserting any of the same patents, and whether the patent may be essential to a standard-setting body.

Perhaps the most controversial part of the bill relates to shifting attorney’s fees. If a presiding judge finds that a lawsuit is not "reasonably justified in law and fact," the plaintiff will be required to pay the defendant’s legal fees. While the idea seems beneficial to both parties in theory—the plaintiff loses nothing under the assumption that the plaintiff had good reason to bring suit, and the defendant receives some financial insurance against abusive litigation—its consequences in practice are still unclear, as is its effectiveness in preventing frivolous patent infringement lawsuits.

The divided opinions on the Innovation Act extend to industry lines as well as to business size. Many software and computer technology companies support the proposed changes, while those in the biotech industry have opposed the claim that such measures have already been enacted through the Leahy-Smith America Invents Act of 2011. Because of the many requirements that would be imposed on prospective plaintiffs, smaller businesses and individuals are disadvantaged when bringing suit, even when they have good reason to pursue legal action. Inventors who are trying to protect their patents against infringement by larger companies cannot compete in terms of the resources, including both time and money, for litigation. The tipping of the scales in favor of large businesses and corporations seems inconsistent with the purpose of the bill to prevent excessive litigation and patent troll extortion, since disadvantaging smaller businesses might open another door for patent trolls to buy up patents in their scheme.

Source: Wall Street Journal