Finally, a bill to end patent trolling?



A patent troll, is a person/company who enforces patent rights against someone who they claim has infringed on their patent rights, the object being to collect licensing fees. But the patent holder/troll does not manufacture products or supply services based upon the patents in question. Patent trolls are also known as patent holding Company (PHC) and non-practicing entity (NPE). However, NPEs like university research laboratories, development firms, etc are not considered patent trolls.

Bob Goodlatt, chairman of the House Judiciary Committee, has introduced a bill that attacks the business model of “patent trolls”. The proposal integrates most of the ideas from previous patent reform bills and thus far there has been widespread praise for the bill.  If passed it will be a huge step forward.

According to the bill, patent holders will have to lay out particulars regarding their infringement case early in a lawsuit, and the loser of a patent suit will have to pay legal fees unless they could show that the case was “substantially justified.”  The bill will allow customers or end users of a technology to stay a lawsuit while the patent holder and the manufacturer are busy with the case.

This bill will take the shine off patent trolling as a business.  This bill stands a good chance of being passed, but it is not confirmed yet.  Though the bill will not end patent trolling it will increase the risks and costs to trolls.  Some of the changes that the new bill will bring is that businesses will now be able to challenge more patents for a much lower fee and they stand a change of recouping their costs if they win the case.

This being said, does not mean that there is no opposition to the bill.  The first one that has raised their voice is Innovation Alliance, who has patent licensers like Dolby Labs, Tessera and Qualcom, opposing the bill

The passing of the will transfer the balance of patent ownership and licensing from small companies and inventors to bigger and financially stronger companies.

When it comes to pleadings, patent holders will now have to show precisely what parts of a product infringes their patent claims and how.  This will force NPE’s or trolls to do a lot more work before they start demanding settlements.

Small operating-company patent plaintiffs, not just trolls, will have more challenges when they decide to take a matter to court.

Only discovery related to the patent claims will be allowed until the key “claim construction phase” of a patent trial is concluded.  Patent holders will also have to identify all parties with a financial interest in the patent and must also reveal on record, the ultimate parent entity that is bringing the patent claim.  Congress also seeks to stop the practice of using patents to go after end users of technology rather than the company that created it.  Innovation Alliance has criticized some sections of the bill and claimed it is too wide.  But we will see what the bill will look like when it is finally passed…