March 23, 2015

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Wyche Inside IP
By Wallace K. Lightsey

Wyche Inside IP previously reported on the effort of Congress to combat abuses by “patent trolls” through passage of the Innovation Act (H.R. 9). This legislation was introduced in 2013 and passed the House of Representatives by an overwhelming bipartisan vote of 325-91, but became bogged down in the Senate.

House leaders and the Obama administration are making a major push to pass the Innovation Act this year. Here are some key provisions of the legislation:

  • It requires plaintiffs who want to sue for patent infringement to disclose who the owner of a patent is before litigation, so that it is clear who are the real parties behind the litigation. This will ensure that patent trolls cannot hide behind a web of shell companies to avoid being held accountable for bringing frivolous litigation.
  • It requires the plaintiffs to provide a meaningful explanation in their pleadings of why they are suing a company.
  • It requires courts to make decisions about patent validity early in the litigation process so that trolls cannot drag patent cases on for years based on invalid claims.
  • When a party brings a lawsuit that does not have a reasonable basis in law and fact, it requires the judge to award attorneys’ fees to the victims of the frivolous suit. Currently this decision is committed to the judge’s discretion.
  • It requires the federal Judicial Conference to craft rules to reduce the cost of discovery in patent litigation, so that patent trolls cannot use the cost of discovery as leverage to extort settlement payments from small businesses and entrepreneurs.
  • As a measure to protect customers that simply bought an allegedly infringing product off the shelf, the Act creates a voluntary process for small businesses to postpone patent suits while their larger sellers complete similar litigation against the same plaintiffs.
  • It requires the U.S. Patent and Trademark Office to provide educational resources for persons facing abusive patent litigation claims.

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