A bill designed to crack down on patent assertion entities, sometimes called “patent trolls,” easily passed the U.S. House of Representatives yesterday. Sponsored by House Judiciary Committee Chairman Robert Goodlatte (R-VA), the Innovation Act targets oft-criticized patent assertion entities for conduct like sending large numbers of demand letters to small businesses without determining if they are actually infringing.
The Innovation Act, H.R. 3309, sailed through the House with a vote of 325 to 91. The Senate Judiciary Committee, which is considering a similar measure, has scheduled a hearing on it for Dec. 17. The White House supports the legislation, which it sees as responsive to the Administration’s call for steps to curb abusive patent lawsuits in June.
Rep. Jared Polis (D-Colo) added a provision at the 11th hour requiring plaintiffs upon filing of an initial complaint to disclose real-party-in-interest information to the USPTO, the court, and the adverse party. That measure was designed, among other reasons, to stop the practice of patent trolls sending multiple demand letters to the same target by hiding behind various shell corporations. In addition, the bill encourages judges to enforce a “loser pays” system, which generally requires plaintiffs who bring losing patent infringement suits to pay the winner’s costs unless the losing party’s conduct is “reasonably justified.” The bill would also require patent plaintiffs to provide specific details on what patents are infringed and how they are used, and it would limit discovery until after claim construction to prevent plaintiffs from using the cost of discovery to leverage higher settlement payments.
While the bill received widespread support in the House, some opponents – including House Judiciary Committee ranking Democrat John Conyers – argue that the “pleading requirements will keep legitimate inventors out of the courts, and fee shifting will favor wealthy parties and chill meritorious claims.” Other commentators, on the other hand, like Santa Clara Law School Professor Brian Love, argue that the bill does not fix the entire “patent troll” problem and there is even more work to be done.