A bipartisan bill that cracks down on potentially frivolous suits from "patent trolls" has passed the House of Representatives. Rep. Bob Goodlatte's (R-VA) Innovation Act passed committee in November and reached the House floor today, where it was approved in a vote of 325 to 91. It has gained wide support both in and outside Congress: the White House officially backed Goodlatte's legislation earlier this week and in fact proposed several of its elements in June, and a host of tech companies and venture capitalists, including Google, have thrown their weight behind it. The Patent Transparency and Improvements Act, a companion bill from Senator Patrick Leahy (D-VT), was introduced in November. That bill is still in committee, but with significant momentum around the issue, it's likely to do well.
The Innovation Act is aimed at keeping the effective structure of the patent system in place but reducing the incentives to send frivolous complaints, cutting down on the alleged billions of dollars of damage done by them, but not everyone agreed it would have the right effect. Groups like the National Small Business Association argue that it places an unfairly high burden on patent holders, making it too difficult for small businesses or individual inventors — rather than large companies — to protect their patents. The NSBA expressed consternation at the "alarming rate" at which patent troll legislation has moved forward: Goodlatte's bill was introduced less than two months ago. Some universities, which develop and license patents but do not build commercial products, also say that the bill's scope is too broad and would hurt their ability to make money from research, and Qualcomm CEO Paul Jacobs said the "point of view of the inventor" was missing from the debate.
Goodlatte's bill raises the bar and the stakes for patent claims
Goodlatte's bill raises the bar for sending a patent infringement letter and raises the stakes for filing and losing a case, making it harder for trolls to send vague letters to companies that would face higher costs from going to court than settling. Under the Innovation Act, a patent complaint needs to list which patents and parts of patents are being infringed and name the offending products or processes, among other things. The potentially lengthy and expensive discovery process in a suit will be held until after a court has interpreted what the patent covers, and if a plaintiff loses, they'll have to pay court costs.
The bill will be most effective against indiscriminate bulk filers, who send letters to both producers and consumers of technology claiming ownership of basic techniques like scanning and emailing a document. Legal scholar Brian Love has said that larger trolls who are willing to take select cases to court won't be deterred as easily, and two major offenders, Intellectual Ventures and IP Nav, have expressed tentative support or mixed feelings for the bill, not outright opposition.
While the legislation moves forward, the FTC is conducting its own work on reducing patent troll lawsuits. Earlier this year, it opened a fact-finding investigation into the structure of patent assertion entities, which often operate through webs of shell companies that make it hard to hold them responsible if they make frivolous claims. So far, though, its actual ability to crack down on trolls has remained unclear, and Goodlatte's bill is a concrete move against one of the most hated groups in tech.