Eshoo Introduces Patent Litigation Reform Bill

WASHINGTON, D.C.—Last week, Rep. Anna G. Eshoo (CA-18), Ranking Member of the Communications and Technology Subcommittee, introduced bipartisan legislation to address the growing problem of abusive patent litigation. Called the Innovation Act (H.R.3309), the bill builds on reforms that were made last Congress in the America Invents Act and addresses certain abusive practices by ‘patent trolls’ in U.S. courts.

“Abusive patent litigation is a drain on our economy and seriously undermines American innovation,” Eshoo said. “In 2011, patent trolls cost companies that actually innovate $29 billion to challenge or settle claims, a 400 percent increase from 2005. The impact of these suits is felt most profoundly on small businesses, including many in the 18th Congressional District.”

Patent trolls are companies or individuals that typically do not invent or manufacture anything, but are merely in the business of litigation. Trolls own patents, often overly broad and vague, and cite infringement as a way of extorting money from dozens and sometimes hundreds of businesses both small and large.

Eshoo continued, “The Innovation Act targets abusive patent litigation but does not eliminate valid patent claims. It requires parties to do more due diligence up front before they can file a claim, optimizing court resources and lessening the burden on the patent system. It enhances education and outreach to small businesses so they can inform and prepare themselves. And it modernizes the patent system to better protect our nation’s innovators. In introducing this bill, we’re moving toward a patent system that encourages entrepreneurship and strengthens the pace of innovation in America.”

Rep. Eshoo was joined in introducing the bill by House Judiciary Committee Chairman Bob Goodlatte (R-Va.), Subcommittee on Courts, Intellectual Property, and the Internet Chairman Howard Coble (R-N.C.), as well as Reps. Zoe Lofgren (D-Calif.), Peter DeFazio (D-Ore.), Lamar Smith (R-Texas), Jason Chaffetz (R-Utah), Spencer Bachus (R-Ala.), Tom Marino (R-Pa.), Blake Farenthold (R-Texas), and George Holding (R-N.C.).

Key Components of the Innovation Act:

• Target Abusive Patent Litigation: The bill targets abusive patent litigation behavior and not specific entities with the goal of preventing individuals from taking advantage of gaps in the system to engage in litigation extortion. It does not attempt to eliminate valid patent litigation.
   
• Protects the Patent System: The patent system is integral to U.S. competitiveness. This legislation does not diminish or devalue patent rights in any way.
   
• Increases Transparency: This legislation includes heightened pleading standards and transparency provisions, requiring parties to do a bit of due diligence up front before filing an infringement suit. It reduces litigation expenses and saves courts time and resources.
   
• Modernizes Fee Shifting: The legislation modernizes fee shifting so that it is fair, clear and will ensure consistent judicial determinations.
   
• Provides Greater Clarity: The legislation provides for more clarity surrounding initial discovery, case management, joinder and the common law doctrine of customer stays. The bill works hand-in-hand with the procedures and practices of the Judicial Conference and the courts.
   
• Small Business Education: The bill provides for small business education and outreach by the U.S. Patent and Trademark Office.

A copy of the legislation can be found here and a section-by-section can be found here.

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