House panel approves bill targeting patent trolls

The bill aims to make it more difficult for patent licensing firms to file lawsuits against other businesses

A U.S. House of Representatives committee has approved legislation aimed at making it more difficult for so-called patent trolls to use infringement lawsuits against other businesses.

The House Judiciary Committee, late Wednesday, voted 33-5 to send the Innovation Act to the full House for action there. The bill attempts to discourage some controversial litigation techniques used by PAEs (patent assertion entities), those firms with patent licensing and lawsuits as their primary business model.

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The bill would require plaintiffs in patent infringement lawsuits to identify the patents and claims infringed in initial court filings, in an effort to reduce complaints about PAEs filing lawsuits with vague patent claims. The bill would also allow judges to require that losing plaintiffs pay defendants' court fees.

The bill would also allow courts to delay massive discovery requests from patent infringement plaintiffs until the patent claims have been interpreted by the court, and it would allow manufacturers and suppliers to intervene in patent litigation against their customers. In recent years, some PAEs have targeted end users of technologies that allegedly infringe their patents in an effort to collect more patent license fees or court awards.

Several tech trade groups applauded the committee's action. Tech companies have been among the most vocal critics of PAE lawsuits, and the Internet Association and the Association for Competitive Technology were among the groups that praised the bill's passage.

The bill's passage "marks progress in the fight against the patent trolls who exhort cash from innovative job creating companies," Gary Shapiro, president and CEO of the Consumer Electronics Association, said in a statement. "Now we must keep up the momentum. Every day that the patent troll issue is not addressed is another day that bad actors can abuse our patent system to extort money from legitimate companies."

The bill's passage is a step toward ending abusive patent lawsuits, said Representative Bob Goodlatte, a Virginia Republican and chief sponsor of the bill.

"Abusive patent litigation is a drag on our economy," he said during Wednesday's hearing. "Everyone from independent inventors, to startups, to mid- and large-sized businesses face this constant threat. The tens of billions of dollars spent on settlements and litigation expenses associated with abusive patent suits represent truly wasted capital -- wasted capital that could have been used to create new jobs, fund R&D, and create new innovations and technologies."

Some committee Democrats complained that the bill would hurt legitimate small inventors by making it more difficult for them to file lawsuits against big companies that infringe their patents. The bill sets up a set of rules "to deal with trolls that will now apply to everyone operating in this space," said Representative Mel Watt, a North Carolina Democrat.

The bill is one-sided in dealing with patent lawsuit abuse by plaintiffs, but not defendants, Watt added. The bill would not stop large defendants from drowning small inventors in a "barrage of tactical motions," he said. "Abusive tactics are not the exclusive domain of plaintiffs or even patent trolls."

The committee debated and amended the bill in a meeting that lasted nearly nine hours Wednesday.

Democrats Watt and John Conyers Jr. of Michigan tried to amend the bill by requiring that Congress stop taking patent filing fees from the U.S. Patent and Trademark Office to use elsewhere in the U.S. government's budget. The diversion of tens of millions of dollars from the USPTO is a "tax on innovation in this country," Conyers said.

One of the biggest issues facing the U.S. patent system is bad patents being awarded by an underfunded USPTO, added Representative Jerrold Nadler, a New York Democrat. If Congress could fix that issue "everything else we're doing would be less necessary," he said.

The committee's Republican majority defeated the patent fee diversion amendment, with Goodlatte arguing that its addition would run afoul of House rules prohibiting most committees from moving legislation that include new spending. The amendment would be a "poison pill" for the Innovation Act on the House floor, he said.

The bill does not deal with recently discussed efforts to curb licensing fee demand letters from PAEs. Goodlatte, chairman of the committee, said he would continue to work with other lawmakers who want to see the committee discourage controversial practices used by PAEs in mass mailings of demand letters.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

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