Two US congressmen are hoping to deter frivolous, counterproductive patent litigation through a new bill that would mandate that losers in patent litigation pay for defendants’ legal costs.
The bill, introduced by Democratic Representative Peter DeFazio and co-sponsored by Republican Representative Jason Chaffetz, would apply to both computer hardware and software patents, and would mark a shift in US judicial approach to software patents.
The Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act would apply not only to patent trolls, known somewhat euphemistically as non-practicing entities, but also to other plaintiffs who pursue litigation but are found by courts to not have “a reasonable likelihood of succeeding."
Patent trolls are widely derided for their practice of purchasing patents en masse and then waging litigation battles against other companies, alleging infringement in the hope of a big payout. Even though the trolls in question may not have sufficient evidence to prove their cases, smaller firms are sometimes driven to settle such lawsuits because the exorbitant legal costs associated with defending themselves in court can be crippling.
"The SHIELD Act ensures that American tech companies can continue to create jobs, rather than waste resources on fending off frivolous lawsuits," Chaffetz said. "A single lawsuit, which may easily cost over $1 million [£640,000] if it goes to trial, can spell the end of a tech startup and the jobs that it could have created."
By putting the financial burden on plaintiffs, the SHIELD Act would deter frivolous litigation from making its way to court, effectively offering innovators in the technology sector a new level of protection.
"Patent trolls don't create new technology and they don't create American jobs," said DeFazio. "They pad their pockets by buying patents on products they didn't create and then suing the innovators who did the hard work and created the product."
The bill may be a step in the right direction for a patent system widely viewed as being in need of reform, especially as high-profile patent cases like Apple and Samsung’s ongoing trial carry on.
Julie Samuels, an attorney leading digital rights advocacy group Electronic Frontier Foundation’s Defend Innovation project, agrees.
“To understand, think about the patent troll business model: making broad claims of infringement based on patents of questionable validity is the troll's favorite move. It's no wonder that many defendants choose to pay up rather than take the time, energy, and especially the money to fight in court,” Samuels wrote in a blog post supporting the SHIELD Act.
“Fee shifting would empower innovators to fight back, while discouraging trolls from threatening lawsuits to start,” she added.