House members renew ‘patent troll’ bill

A bipartisan group of 20 lawmakers on Thursday reintroduced legislation aimed at reining in “patent trolls.”

House Judiciary Committee Chairman Bob Goodlatte’s (R-Va.) bill targets abusive practices by companies that buy up patents for the purpose of extracting settlements with the threat of often frivolous litigation. 

Advocates say the abuse has cost businesses billions of dollars a year. 

Goodlatte, along with a group of 19 bipartisan co-sponsors, is hoping to push the Innovation Act “expeditiously” this year. The House overwhelmingly approved similar legislation last Congress. 

“We’ll be starting exactly where we left off from the last Congress — the same legislation that passed the House by wide margins,” Goodlatte said. “We are picking up right there, and we are going to move expeditiously. But we have set no timetable other than holding hearings.” 

Next week, the committee will explore the changing landscape of the patent system, following recent court decisions and other changes at the executive level that some say contributed to the nearly 40 percent drop in patent lawsuits in the last year. 

Goodlatte said the drop encourages him but reforms must still be codified into law.  

He emphasized that his legislation is meant to target abuse, not specific entities. A number of groups including technology companies, retailers and restaurant associations back the bill.

“A troll is impossible to define unless you’ve been mugged by one,” said Rep. Darrell Issa (R-Calif.), who leads the subcommittee on intellectual property and owns of a number of patents. 

Rep. Peter DeFazio (D-Ore.), another co-sponsor, described patent trolls as “litigious leaches” and “bottom feeding parasites” that would kill startups if left unchecked. 

One contentious section of the legislation deals with fee shifting. The bill would make the losing party pay the winning party’s legal fees if a lawsuit is determined to be unjustified. Some Democrats, including Rep. Jerrold Nadler (N.Y.), who also co-sponsored the bill, have expressed reservations about the provision. But Nadler said he was promised an open debate. 

The bill would also require companies bringing lawsuits to use greater detail in initial court documents and force plaintiffs to disclosure who they are and any other companies that have a financial stake in the lawsuit. 

The bill would also limit the amount of discovery necessary, which could remove a tool used by trolls to run up the costs of litigation in order to extract a settlement. It would also call on the Judicial Conference of the United States to come up with rules to allow for additional discovery if the party making the request pays the cost.

The bill would also protect end-users by allowing them to delay lawsuits against them until similar litigation against a manufacturer has ended. To highlight the need for the change, many have used the example of lawsuits filed against retailers who provide Wi-Fi to customers, because the technology is purported to violate a patent.   

One of the first steps in patent litigation is a demand letter, in which a company can accuse infringement and threaten legal action. The legislation would express a sense of Congress that sending purposely evasive demand letters should be considered a fraudulent and deceptive practice. Goodlatte did not rule out strengthening that provision going forward. 

One provision left out of the bill would have allowed defendants of patent lawsuits to use a Patent Office process to quickly challenge whether the patent being asserted is legitimate and not overly broad. The provision would have extended a program that offered a speedy and less expensive alternative to litigation. 

That section was removed before final passage last Congress. Goodlatte said he would not “declare anything dead” but noted the current bill has already been vetted without the provision.  

The entire legislation passed 325-91 last Congress. Only about 40 days elapsed between introduction and passage, but Goodlatte noted that a long, open debate preceded the introduction. Reform stalled in the Senate last year, however, after then-Majority Leader Harry Reid (D-Nev.) vowed to prevent legislation from making it to the floor, stemming from concerns from the pharmaceutical and biotechnology industries, as well as trial lawyers. 

Critics continue to harbor concerns that the changes to court proceedings could backfire. The Biotechnology Industry Organization, for example, said the new legislation undermines “the ability of legitimate patent owners to commercialize their inventions” and defend their patent rights.