Contrary to popular belief, Congress could enact bipartisan legislation on behalf of American innovators and businesses — reforms to our patent system are one such example.
Currently, Congress is considering legislation to rein in frivolous lawsuits that hinder competitiveness, clog the patent dockets and divert resources that are better spent on innovation. Such legislative efforts continue our work over the past decade to make the patent system more efficient and effective.
In the last Congress, the Leahy-Smith America Invents Act was enacted to update our nation’s patent process, safeguard Patent and Trademark Office resources, ensure the validity of patents granted to reduce frivolous litigation and limit barriers to innovation. The America Invents Act, which I introduced, was the most significant change to U.S. patent law in 175 years.
While the America Invents Act provided some necessary tools to reduce abusive patent litigation, many activist courts still approve frivolous patent claims by patent assertion entities, or “patent trolls.” These trolls engage in abusive patent litigation tactics. They use weak patents to extort millions of dollars from innocent parties through demand letters and frivolous patent infringement lawsuits. Businesses are forced to choose between years of costly litigation or settlement. Meanwhile, patent trolls make millions off their scam.
The number of patent infringement claims has almost doubled since 2009. The New York Times reported that one lawyer filed patent lawsuits against 1,638 companies in the past five years. Such action amounts to legal extortion. And no one has been spared. Startups, small to medium-sized family businesses, independent inventors and major corporations all have received demand letters and have been sued. These lawsuits use up capital that is better spent on investment, innovation and job creation.
In fact, a 2012 study by the Boston University School of Law found that patent trolls cost the American economy $80 billion annually. The study also found that defendants paid $29 billion to patent trolls in 2011 alone.
So our efforts to improve the patent system are not finished. The House Science, Space and Technology Committee, which I chair, continues to strengthen the standards that govern the science, technology, and research and development from which inventions are derived. This improves innovation before the patent process begins.
The House Judiciary Committee and a bipartisan group of members hope to improve our patent system with HR 3309, the Innovation Act, which was introduced by Robert W. Goodlatte, R-Va., chairman of the House Judiciary Committee.
The Innovation Act targets abusive patent litigation while protecting legitimate patent infringement claims. It provides accountability on the front end of litigation by requiring parties to state exactly why they file suit. Heightened pleading standards along with additional transparency requirements and reasonable limits on discovery cut the cost of litigation.
HR 3309 will make abusive patent litigants think twice about trolling. It includes a fee-shifting provision that requires parties who file meritless patent claims to pay the attorneys’ fees of their victims as a disincentive to pursue their baseless lawsuit. This provision applies to both plaintiffs and defendants alike.
Terri Henderson, 6, center, whose mother is El Salvador, attends a rally with members of Congress at Union Station's Columbus Circle to announce the Restore Opportunity, Strengthen, and Improve the Economy (ROSIE) Act on July 29, 2014. The legislation provides incentives for government contractors to pay a living wage and other benefits that would help low-income workers.