New patent legislation was voted through the House of Representatives last December and is now being considered by the Senate. The last time the patent process was updated was 2011, but that legislation, known as the “America Invents Act,” for the most part fell flat. The biggest change that occurred in 2011 was switching from a first-to-invent system to a first-to-file system.
The new legislation, known as the “Innovation Act,” is meant to end the issue of “Patent Trolls.” Patent Trolls are “companies that buy cheap patents and use them for profit by threatening infringement suits against others in hopes of settling.” The Innovation act includes several changes to the litigation process that will make it harder for patent trolls to file suits indiscriminately.
1) “Require specificity in patent lawsuits” – as the law stands now patent holders are not required to state specifically what is in violation when they file suit, the innovation act would require patent holders to state this.
2) “Make patent ownership more transparent” – Shell companies are a popular means for patent holders to disguise who is actually filing suit. The Innovation Act would require anyone who stands to make a financial gain to be listed by patent holders.
3) “Make losers pay” – The new bill would require losing plaintiff’s to pay winning defendants legal fees. This would remove the fear of legal fees that causes many defendants to settle even in the case when they are right.
4) “Delay discovery to keep costs down” – the new bill delays the point in the trial when defendants would be required to release sensitive internal documents to be used in the trial.
5) “Protect end users” – a popular tactic of patent trolls is to sue end users of product that are in violation of patents. The Innovation act would allow the producers of these products to step in and take part in the lawsuits on their customers behalf
The are many legitimate companies whose business models rely on patents that have spoken out against the new bill, notably Apple, Du Pont, Ford, GE, IBM, Microsoft and Pfizer. The most surprising critics of the bill are several University groups. Universities hold lots of patents from all of the research that they do, and in some instances the tactics that they use to enforce their patents resemble those of patent trolls.
I think that this new legislation looks very promising. Holding patent holders accountable for the litigation that they create should seems like a good idea to reduce frivolous lawsuits. From a utilitarian point of view, this bill would increase the happiness for the consumers and producers that frivolous lawsuits are filed against; the bill would reduce happiness for the relatively small number of “patent trolls” who benefit from these lawsuits.