US congressmen take on patent trolls with SHIELD Act
Summary: A bipartisan bill aims to bring in a 'loser pays' system for software and hardware patent lawsuits, to protect startups from companies that want to force settlements through the threat of high legal bills
Two US congressmen have introduced a bill that would force so-called patent 'trolls' to pay the legal costs of the people they sue, if the suit is unsuccessful.
The Saving High-tech Innovators from Egregious Legal Disputes (SHIELD) Act was introduced on Wednesday by Democrat Peter DeFazio and Republican Jason Chaffetz. The congressmen said the move was intended to save tech start-ups jobs, which are often threatened by such lawsuits.
"Patent trolls don't create new technology and they don't create American jobs," DeFazio said in a statement. "They pad their pockets by buying patents on products they didn't create and then suing the innovators who did the hard work and created the product. These egregious lawsuits hurt American innovation and small technology startups, and they cost jobs. My legislation would force patent trolls to take financial responsibility for their frivolous lawsuits."
'Non-practising entities'
'Trolls' — more formally known as 'non-practising entities' or NPEs — usually operate by suing firms for allegedly infringing on the broad patents the NPEs have bought as legal weapons.
Patent cases are costly and the firm being sued can be liable for massive costs even if their defence is successful. Smaller firms in particular therefore tend to settle rather than fight the NPE's claim, as was the case with Lodsys and app developers.
Even large firms sometimes pay up. A good example there is Eolas, an NPE that has been surprisingly successful with patents that supposedly cover much of web technology.
"A single lawsuit, which may easily cost over $1 million if it goes to trial, can spell the end of a tech start-up and the jobs that it could have created," Chaffetz said. "This bill combats the problem of patent trolls by moving to a 'loser pays' system for software and hardware patent litigation."
As Ars Technica has pointed out, the SHIELD Act would not only be limited to NPEs. The wording of the bill targets any plaintiff "who did not have a reasonable likelihood of succeeding" in their patent lawsuit.
Software patents
The site also notes that this is the first piece of US legislation to define software patents. This is significant — as is the bill as a whole — because the US is both the epicentre of the tech industry and a country that allows software patents. Such patents, which often cover little more than ideas, are generally not granted in the EU, for example.
However, people in the EU use tech products developed in the US, and vice versa. Therefore, the actions of NPEs in the US can affect customers anywhere in the world if they use US-made products, and start-ups anywhere in the world can be targeted by US NPEs if they have customers in that country.
According to the Act, the term 'software patent' means: "(A) a patent that covers any process that could be implemented in a computer regardless of whether a computer is specifically mentioned in the patent; or (B) any computer system that is programmed to perform a process described in sub paragraph (A)."
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Talkback
Long over due
Hardware patents.
That would put a stop to the practice of some majors in this area of hosing the whole of mobile tech space with concept patents intended to do no more than create a gigantic legal minefield in order to restrict competition.
Working prototype, no patent
Not broad enough
The bad news is...
I'm suspicious of "loser pays" in most circumstances (but I think it should apply in criminal cases), but it may well be appropriate here.
UMMM... I'm almost speechless.
Am I missing something here? Is this congress really this F(@(^$% stupid?!?! Hey what's next? Let's call it some cool name like "SHIELD" so that people feel like it's helping them. Kinda like the "Patriot Act". What knucklehead would vote against something called "Patriot", even if several passages read like there were written by right-wing leftovers from the USSR.
SMHID. Congress. Not sure that just voting is ever gonna fix that mess. It's gonna take a political revolution. Change everything. Change how we vote, who gets voted in, how long they get to stay, where their money comes from, and who gets to talk to them.
Yes congress is that stupid, and so have the 100 before them.
Not quite
Only lawyers would think that fixes anything for small business
The problem it solves it the one of -big- companies facing these suits. Trolls frequently sue big companies just to shake the coconut tree and see if anything falls out. Many big companies will send a token bag of money just to make the troll go away. Loser pays would make the big companies more likely to assess their odds and actually fight some of the claims in court.
Re: Not quite
And if the bar for filing is raised so that it is easier to recover attorney fees, defendants may be more inclined to stay in litigation longer and through trial, thereby still clogging the courts.
But NPE's have very little interest in going to trial to even determine whether this bar will be met. They want a license and will almost always set the cost of the license after negotiations at some amount far less than the projected cost of litigation fees. For most companies, they will eventually pay these fees and move on.
Lastly, NPEs do not file lawsuits where there is not a reasonable chance of success. Their attorneys typically get paid on contingency fee basis so they will not file a suit unless they think they have a chance of getting get paid eventually. Even so-called nuisance suits must be filed in good faith with a cognizable legal claim.
All this legislation does is waste Congress's time and will serve to bring one more bump of uncertainty in patent law.
If there were any leftovers from the USSR, they would be left-wing
Sort of
If the Communist Party is the only game in town, people interested in advancing themselves will tend to apply, whether they actually believe in the ideology or not, which is why one party states quickly start being more about power than principle; just like political machines here in the West.
Not "sort of". It's, "in fact", since, the USSR was a leftist type of
Obama a soviet leader? Insanity
Go read some history. You are showing your lack of education by this sort of shrill posturing. Just one tiny almost immeasurably small step away from the classic "just like Adolf" claims of tinfoil hatters.
Akkk! Sorry for the comment!
Nothing will change the Patent Parasites love it this way.
This has Apple written all over it
Worst Patent Trolls...
A good example that was finally overturned in court was ClearChannel patenting the idea of recording live concerts, essentially with off the shelf hardware and software that most of us in Recording were already aware, and putting them together like most of us did, and you have a duplicate recording available for sale within minutes of the end of a concert.
Totally known to anyone with live recording knowledge and experience, but ClearChannel only wanted to make money off of people doing what they normally do. It really wasn't an applicable patent because there was no development on the part of the patent holder, other than writing up a piece of paper to vaguely describe the process without even coming up with a wiring diagram or interface standard for the system because all of that was already covered by AES standards. Yet they got a patent.
So having a functional product of at least some original thought on implementation should be an absolute requirement. It can't be taking a TV and wiring it to the stereo and trying to patent it.
Couldn't agree more, but
This actually legitimizes software patents
Software Patents Must Stop.