Some Cry Foul as 'Patent Troll' Bill Clears House

, The Litigation Daily

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The Innovation Act, the patent reform bill intended to crack down on so-called patent trolls, won passage by the U.S. House of Representatives on Thursday by a vote of 325 to 91, as our affiliate The Blog of Legal Times reports. Companion legislation stands a good chance of passing the U.S. Senate, which is expected to act before the end of 2013. But expect to see plenty of pushback as well—and not just from patent licensing companies and the lawyers who represent them.

A common refrain from "troll" targets is that fighting back is more expensive than settling. To combat this problem, the House bill would give defendants a chance to knock out infringement claims before the costly discovery process begins. For the stated purpose of increasing transparency, the bill would also require patent plaintiffs to publicly close who has a "direct financial interest" in their cases.

Perhaps most significantly, the bill would introduce a loser-pays system for patent cases. A last-minute amendment to strip the fee-shifting almost passed the House, and will no doubt feature prominently in the Senate debate.

These provisions enjoy great support from tech companies on the receiving end of what they say are weak but costly patent lawsuits. "Ultimately, fee shifting will give small defendants a chance to fight back against weak troll cases," wrote the Electronic Frontier Foundation in a blog post. "At the same time, it will do no harm to a party who has a legitimate claim of infringement on a good-quality patent."

The Innovation Act has also drawn opposition, however, including from small-time inventors and universities that license patents. As The Washington Post reported, four groups that represent the interests of universities wrote in a Nov. 8 letter that the bill could cause "unintended problems." On Tuesday, meanwhile, the Federal Circuit Bar Association wrote to the bill's sponsor, Virginia Republican Bob Goodlatte, warning that the legislation is “neither sufficiently precise nor likely to be effective."

As you'd expect, those in the business of monetizing patents are the bill's strongest critics. "It's getting to the point of hysteria, really," said Anthony Brown, a former big- firm lawyer who takes great pride in helping inventors assert their patents despite getting slapped with the "troll" label. "Of course, there some bad actors. But there are already things in place that let judges address the people behaving badly," Brown said.

Brown is particularly opposed to the fee-shifting provision. He argues that it can be tough to tell whether a patent case is frivolous, as evidenced by the fact that many cases get revived on appeal.

"There's a lot of gray area in this business," Brown said.

 

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