Patent reform is back in a big way in 2015 – and that’s a good thing.
Today, App Association members and small companies are under threat from patent trolls that weaken the value of the patent system.
Patent trolls are bad actors that use use vague demand letters to assert ownership over badly-written patents. They abuse the patent system by intimidating small companies into paying a licensing fee rather than going to court. And with the cost of defending against a troll typically amounting to $650,000, it’s not surprising that many companies avoid paying hundreds of thousands in legal bills, and give in to the demands of trolls.
But, it’s time to put an end to this vicious cycle. Luckily, there’s a broad bipartisan effort in Congress working to address this issue. The Innovation Act, introduced by House Judiciary Chairman Bob Goodlatte, will help small companies fight patent trolls that threaten innovation.
The legislation stops these bad actors in two critical ways.
First, the Innovation Act establishes transparency requirements. It requires demand letters and lawsuits to provide clarity in patent ownership and infringement claims. Too often patent trolls hide behind shell companies and send vaguely worded letters to confuse the recipient.
That means an exorbitant amount of time and money is spent trying to determine the legitimacy of an accuser and its patent. Recipients have no idea how they are purportedly infringing or who is behind the suit. In order to find out, they must spend thousands of dollars in legal fees, often more than the cost to “license” the patent from the troll. By requiring clarity, small companies can better defend themselves – and stop needlessly spending money on lawyers just to decipher a frivolous letter.
Second, the Innovation Act empowers small companies through “fee shifting.” The bill would ensure that court costs and attorney’s fees are automatically shifted to the losing party unless the losing party was “reasonably justified” in bringing the lawsuit. Essentially, if a patent troll loses its lawsuit, it has to pay your legal bills.
These two adjustments are specifically tailored to meet the needs of small inventors and startups that want to protect their patents by taking an infringing company to court. The Innovation Act squeezes out bad actors and encourages innovation and growth in the tech industry.
So, what’s next?
Last year the Innovation Act passed the House with overwhelming bipartisan support. The current bill has support from members on both sides of the aisle who are leaders in intellectual property. And the best part? This is a bill that President Obama has already committed to sign into law.
All we need now is for both the House and Senate to commit to protecting small companies and startups from patent trolls and pass the Innovation Act.
Read ACT | The App Association’s letter of support for the Innovation Act here.