H.R. 845 SHIELD Act Revised – patent litigation Trolls

H.R. 845 SHIELD Act Revised – patent litigation

New House legislation would create financial deterrence measures to curb patent litigation by trolls by imposing “loser pays.” There will be a House hearing on patent litigation on Thursday, March 7. Details below.

H.R. 845 “Saving High-Tech Innovators from Egregious Legal Disputes Act”SHIELD Act (Revised)

On Wednesday, Reps. Chaffetz (R-UT) and DeFazio (D-OR) introduced H.R. 845, “To amend chapter 29 of title 35, United States Code, to provide for the recovery of patent litigation costs, and for other purposes.” It essentially adopts the “loser pays” model whereby the loser would be required to pay the winner’s legal fees. Although the official final text is not yet publicly available, the draft version of the bill shows a broader approach than their bill that died in Committee last session, H.R. 6245 the “Saving High-Tech Innovators from Egregious Legal Disputes Act of 2012” (SHIELD Act).

The bill includes two major changes. The first change is that it applies to all types of patents, not just “computer hardware and software patent litigation.” Second, it changes the threshold from the “party alleging the infringement of the patent did not have a reasonable likelihood of succeeding” to “a party asserting invalidity or noninfringement may move for judgment that the adverse party does not meet at least one [of three conditions].”  Those three conditions include: (1) original inventor, (2) exploitation of patent (i.e. showing substantial investment through production or sale), and (3) university or technology transfer organization. H.R. 845 would define a university as under Section 101 of the Higher Education Act of 1965 and a technology transfer organization as one “whose primary purpose is to facilitate the commercialization of technology developed by one or more institutions of higher education.” Thus, entities not meeting one of these three criteria would be considered “trolls,” subject to the loser-pays model.

H.R. 845 http://beta.congress.gov/bill/113th-congress/house-bill/845?q=H.R.+845
[The text isn’t yet publicly available.]

H.R. http://thomas.loc.gov/cgi-bin/query/z?c112:H.R.6245

Reps. Chaffetz-DeFazio, Press Release: http://chaffetz.house.gov/press-release/chaffetz-defazio-introduce-expanded-shield-act-combat-patent-trolls

Hearing on “Abusive Patent Litigation: The Impact on American Innovation & Jobs, and Potential Solutions”
Subcommittee on Courts, Intellectual Property and the Internet
House Judiciary Committee
Thursday, March 7, 2013, 9 am ET
Witnesses have not yet be announced publicly. Rep. Chaffetz serves on the Subcommittee, so H.R. 845 likely will be part of the discussion. I’ll be in Denver at SIGCSE and unable to attend the hearing. http://judiciary.house.gov/hearings/113th/hear_03072013.html

ADDITIONAL RESOURCES

Former USPTO Director Kappos highlighted the SHIELD Act during his 2012 speech at the Center for American Progress. He stated, “Another legislative proposal aims at curbing speculative patent suits that leverage litigation cost to extract settlements based on borderline frivolous infringement claims. The SHIELD Act, legislation introduced in Congress earlier this year, would seek to deter such law suits by requiring the loser of an infringement case to pay court costs and attorney fees for the winner.” http://www.uspto.gov/news/speeches/2012/kappos_CAP.jsp

Microsoft’s Executive VP and General Counsel Brad Smith called for loser pays legislation at last week’s Congressional briefing on software patents. See my summary of that event. http://techpolicy.acm.org/blog/?p=2165

The Application Developers Alliances this week endorsed H.R. 845 but expressed concern that innovators and small businesses still need a “quicker and cheaper program for challenging trolls patents” in the USPTO as an alternative to litigation.  http://appdevelopersalliance.org/news/2013-02-27-Patents

Renee Dopplick
Senior Public Policy Analyst
Association for Computing Machinery (ACM)
1828 L Street, NW, Suite 800
Washington, DC 20036

ACM Public Policy Office
http://www.acm.org/public-policy

ACM U.S. Public Policy Council
http://usacm.acm.org

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