House Judiciary Passes 'Patent Troll' Bill

NCTA Hails As 'Strong Step'
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It's Title II stay request may have been--unsurprisingly--denied, but the National Cable & Telecommunications Association got a little good news as well Thursday (June 11).

The House Judiciary Committee passed the bipartisan Innovation Act (H.R. 9), which would crack down on so-called "patent trolls."

The vote was 24 to 8 on the bill, which was sponsored by Committee Chairman Bob Goodlatee (R-Va.).

The goal of the bills is to address the problem of the abuse of patent demand letters, in which entitles attempt to extort, or succeed in extorting, money from the targets of the letters to avoid costly litigation.

“NCTA applauds Chairman Goodlatte and the House Judiciary Committee on passage of the bipartisan Innovation Act (H.R. 9)," the NCTA said. "This legislation is a strong step in helping to deter patent trolls so that American companies can focus on innovation and growth instead of abusive and unjustified patent litigation. We urge the full House to take up and address this important legislation."

Innovation Alliance Executive Director Brian Pomper saw it quite differently

“Today’s markup in the House Judiciary Committee reinforced that the Innovation Act needs significant work before it should be allowed to move forward in the legislative process," he said. "Despite concerns raised by a broad coalition of universities, inventors, manufacturing technology and life science companies, venture capitalists, startup communities, and others, as well as bipartisan concerns raised by members of Congress, the bill still includes numerous overly-broad and harmful provisions that need to be addressed.  

The Senate Judiciary Committee last week passsed its version of "patent troll" legislation, also after some pushback from legislators concerned it was overreach that could chill inventors. (http://www.multichannel.com/news/policy/patent-act-approved-senate-judic...).

According Judiciary Committee, the key elements in the bill are:

1, Targets Abusive Patent Litigation: The bill 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.  It does not attempt to eliminate valid patent litigation.

2. Protects the Patent System: This legislation does not diminish or devalue patent rights in any way.

3. Increases Transparency: This legislation requires greater transparency in patent litigation and requires parties to explain exactly why they are suing a business or individual.  Requiring parties to do a bit of due diligence up front before filing an infringement suit is just plain common sense. It not only reduces litigation expenses, but saves the court’s time and resources. Greater transparency and information is a good thing and it makes our patent system stronger.

4. Prevents Extortion: The legislation prevents any one party in a patent lawsuit from unilaterally racking up extreme litigation costs for another party in an attempt to force a dubious settlement.

5. Provides Greater Clarity: The legislation 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.

6. Small Business Education: The bill provides for small business education and outreach by the U.S. Patent and Trademark Office.

7. Places Reasonable Limits on Venue in Patent Cases:  Restores Congress’s intent that patent infringement suits only be brought in judicial districts that have some reasonable connection to the dispute. Since 1897, Congress has regulated the venue in which patent actions may be brought. These limits protect parties against the burden and inconvenience of litigating patent lawsuits in districts that are remote from any of the underlying events in the case. In 1990 the U.S. Court of Appeals for the Federal Circuit “reinterpreted” that statute in a way that robbed it of all effect. The Innovation Act corrects the Federal Circuit’s error, and restores the congressional purpose of placing some reasonable limits on the venue where a patent action may be brought.

8. Reduces Unnecessary, Expensive Discovery: Requires that courts stay discovery in a patent case when a motion to dismiss or a motion to transfer has been filed.  This will help parties avoid expensive, wasteful discovery that might otherwise be used as leverage by patent trolls looking for a quick settlement when a case can be resolved quickly and early."

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