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2013-11-07

Bipartisan bill reduces frivolous patent lawsuits

by Lamar Smith Special to the Courier

Last week, Science, Space, and Technology Committee Chairman Lamar Smith joined House Judiciary Committee Chairman Bob Goodlatte of Virginia in introducing legislation that reduces abusive litigation practices that plague the country's patent system.
The bipartisan Innovation Act - HR 3309 - builds on reforms that were made last Congress in the Leahy-Smith America Invents Act, which Congressman Smith authored and President Barack Obama signed into law. The Innovation Act addresses the problem of patent trolls, who file frivolous lawsuits based on weak patents in order to force settlements outside of court.
"Patent trolls engage in legalized extortion by using weak patents and frivolous lawsuits to demand settlements from companies and businesses across the US," Smith said. He added that the "patent predators" stifle economic growth, leaving companies with less capital to invest, innovate and create jobs.
Smith continued, "Unfortunately, abusive patent litigation has become big business. According to the Boston University School of Law, patent trolls cost the American economy $80 billion per year. And patent infringement lawsuits have doubled in the last three years-from 2,300 to 4,700. The Innovation Act helps protect innovators and job creators from abusive litigation, while preserving the rights of legitimate patent infringement claims."
Describing abusive patent litigation as "a drag on our economy," Goodlatte added, "Everyone, from independent inventors, to start-ups, to mid- and large-sized businesses, face this constant threat. The tens of billions of dollars spent on settlements and litigation expenses associated with abusive patent suits represent truly wasted capital - wasted capital that could have been used to create new jobs, fund R&D, and create new innovations and technologies.
"The bipartisan Innovation Act is designed to eliminate the abuses of our patent system, discourage frivolous patent litigation and keep US patent laws up to date. These important actions will help fuel the engine of American innovation and creativity, creating new jobs and growing our economy."
Additional original cosponsors of HR 3309 include bipartisan representatives who cross the political spectrum.
Key components of the Innovation Act include:
• Targeting abusive patent litigation - Targets abusive patent litigation behavior and not specific entities with the goal of preventing individuals from taking advantage of gaps in the system to engage in litigation extortion. The bill does not attempt to eliminate valid patent litigation.
• Increases transparency - Includes heightened pleading standards and transparency provisions. Requiring parties to do due diligence up front before filing an infringement suit is just commonsense. It not only reduces litigation expenses, but also saves the court's time and resources. Greater transparency and information is a good thing and it makes the patent system stronger.
• Modernizes fee shifting - Includes a modernized version of Section 285 fee shifting that is fair, clear and will ensure consistent judicial determinations.
• Provides greater clarity - Provides for more clarity surrounding initial discovery, case management, joinder and the common law doctrine of customer stays. The bill works hand-in-hand with the procedures and practices of the Judicial Conference and the courts.
• Small business education - Provides for small business education and outreach by the US Patent and Trademark Office.
More information about H.R. 3309 can be found at http://judiciary.house.gov/news/2013/10232013_2.html.