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A bipartisan bill introduced into the U.S. House of Representatives July 22 would give technology users relief from the lawsuits of patent trolls when they go after companies and individuals who do something as simple as buying products from an electronics store.
The legislation, called the “Stopping Offensive Use of Patents Act” (H.R. 2766), is sponsored by California Representatives Darrell Issa and Judy Cho. The House resolution closely parallels legislation introduced in the U.S. Senate by Senator Charles Schumer called the “Patent Quality Improvement Act of 2013,” which was filed May 6.
According to a press release issued by Rep. Issa’s office, the legislation would revise the existing business method patent process to allow a wide variety of such patents to be challenged. Currently, a Transitional Business Method Program allowing such challenges to patents is limited to financial services. The new act would expand that coverage.
“This change will allow the U.S. Patent and Trademark Office to determine the extent of the validity of a number of patents, particularly those related to software and computers, where litigation abuse has run rampant,” Issa’s office said in its press release.
“Right now, patent trolls are manipulating the overly broad and poorly determined patent definition to win settlements and damages from tens of thousands of real American innovators,” said Rep. Issa in a prepared statement.
“As a patent holder, I know how harmful and expensive these aggressive litigation tactics are for American entrepreneurs. Instead of spending money on new hires or technology, innovators are faced with millions of dollars in legal fees to resolve these baseless lawsuits. The STOP Act provides tools for legitimate patent holders to put an end to the abuse,” Issa’s statement said.
In a statement released by Sen. Schumer when he introduced his legislation in the Senate, patent trolls have become a huge problem to legitimate users of technology. “Specifically, this has been an enormous problem among technology start-up companies,” Sen. Schumer said in a prepared statement. “62 percent of patents asserted by trolls from 1990-2010 were software patents; 75 percent were in computer and communications technology. And this is a particular problem for small businesses: 82 percent of companies targeted by trolls [have] annual revenues less than $100 million.”
While both bills appear on the surface to be minor adjustments to existing laws, in fact they will bring about major changes in how covered business methods patents are handled, especially when patent trolls try to sue end-user companies who are simply trying to use products they bought at Staples or Best Buy.
Bipartisan Bill Aimed at ‘Patent Trolls’ Introduced in U.S. House
“This is probably the most important of the proposals out there,” said Matt Levy, patent counsel for the Computer & Communications Industry Association, which issued statements of support for both the House and Senate versions of the bill. “This allows you to disarm the trolls.”
“This legislation would help recall bad patents that have become the weapons of patent trolls,” said CCIA president and CEO Ed Black in a prepared statement. “The patent system has become off balance with a few bad actors using the legal system to extort money from everyone from restaurants and businesses that have Websites to those buying office equipment.”
Levy explained that business methods patents cover ways that companies can make use of existing technology. For example, a recent patent that covers emailing a scanned document doesn’t claim to have invented scanners, email or the networks over which they travel. Instead, that patent, which is being widely asserted, claims to have invented the process.
While the patent claim is bogus, the only way to challenge the patent is to prove it only through the use of existing patents or printed publications that show prior art. The new legislation would allow a much broader choice in the ways that the patent could be shown to be invalid.
The Senate and House bills that would disarm patent trolls are only two of a flurry of bills that have been introduced in Congress in the last few weeks. The SHIELD (Saving High-Tech Innovators from Egregious Legal Disputes) Act would force patent trolls to post a bond to cover defendants’ legal costs. H.R. 2024 would end anonymous patents and increase transparency. S. 1013, the Patent Abuse Reduction Act, would change the way patent suits are filed and would require specific complaints as to what patents are being claimed. The Patent Litigation and Innovation Act (H.R. 2639) is a House bill that tracks closely with the Senate bill.
According to observations by Matt Levy in his blog, many of the provisions in the bills introduced in the last few months will likely be integrated into fewer bills by the chairs of the House and Senate Judiciary Committees. The legislation, coupled with the investigations launched by the Federal Trade Commission, will likely spell doom to patent trolls, at least in their current incarnation. But then the obvious question is where they’ll pop up next.