WASHINGTON (June 26, 2015) — Legislation has been passed by the Judiciary Committees in both the U.S. House of Representatives and Senate that targets so-called “patent trolls.”
These companies aggressively enforce their patents rights beyond the scope of the actual patents, according to the Specialty Equipment Market Association's (SEMA) e-newsletter. Patent trolls frequently obtain patents for goods and services they have no intention of offering and on common technologies or business practices.
The trolls then send “demand” letters threatening patent-infringement lawsuits against unsuspecting businesses unless the business pays for a license, SEMA's Washington, D.C., staff said. Often times “companies may settle claims rather than risk court action, and settlements fund the trolls and encourage more trolling,” SEMA said.
The bills approved by the House and Senate Judiciary Committees make patent ownership and licensing more transparent and are aimed at helping to curtail patent-troll activity by requiring entities claiming patent infringement to clearly outline their claims in patent demand letters and to the courts. Costs associated with patent litigation would be controlled by providing mechanisms to delay the discovery process, which can cost non-infringing entities significant sums of money, and by allowing retailers at the end of the supply chain to continue to sell a product subject to patent litigation, SEMA said.
The bills also create a small-business education and outreach program within the U.S. Patent and Trademark Office to assist companies caught in patent-infringement cases.
SEMA said the two bills making their way through Congress differ in a few ways — with only the House bill requiring patent-infringement suits be brought in judicial districts that have some reasonable connection to the dispute. The House bill also includes a “loser pays” provision to help prevent frivolous lawsuits by requiring the loser to pay the winner's legal fees. The Senate bill requires the loser to pay if a court determines the losing party was not objectively reasonable in initiating the lawsuit. The respective bills now go to the House and Senate floor for consideration.
The Senate bill requires the loser to pay if a court determines the losing party was not objectively reasonable in initiating the lawsuit, according to SEMA.
The respective bills now go to the House and Senate floor for consideration.
The House Energy and Commerce Committee also approved legislation earlier this year to create a federal standard regarding patent trolls, which would preempt 20 different state laws on the issue, SEMA said. This bill “outlines unfair and deceptive acts, provides the Federal Trade Commission with authority to investigate abusive practices and enforce the proposed law, and creates civil penalties of up to $5 million for related violations.”
This legislation also awaits consideration by the full House, according to Diamond Bar, Calif.-based SEMA.