You may have noticed an increase in the mention of patent trolls in the news and the negative impact that they often have on small businesses. A recent LegalZoom article discussed some of the issues.
“A Patent Assertion Entity (PAE), also known as a “patent troll,” is an individual or company that acquires patent rights for innovations developed by others—either by purchasing questionable business method patents or other active patents, sometimes from companies in bankruptcy—solely for the purpose of filing claims against unwitting infringers. In some estimates, more than 60 percent of patent lawsuits are brought by NPEs today, while in 2006 the rate was about 19 percent. These estimates don’t include those who were threatened with a lawsuit but never sued. For most victims, the only two choices are to pay the claim or fight it in court, a daunting prospect most can’t afford. The threat of lawsuit alone leads many to settle rather than risk a costly court battle.”
On December 5, 2013, the House of Representatives passed the Innovation Act (H.R. 3309). The legislation, introduced back in October, was sponsored by Rep. Bob Goodlatte of Virginia. The Innovation Act seeks to halt abusive patent litigation. Goodlatte released a statement in response to the bill’s passage.
“In recent years, we have seen an exponential increase in the use of weak or poorly-granted patents by so-called patent trolls to file numerous patent infringement lawsuits against American businesses with the hopes of securing a quick payday. Everyone from independent inventors, to start-ups, to mid and large sized businesses face this constant threat.
“The enactment of the Innovation Act is something I consider central to U.S. competiveness, job creation, and our nation’s future economic security. The bipartisan legislation takes meaningful steps to address the abusive practices that have damaged our patent system and resulted in significant economic harm to our nation. I am encouraged by the overwhelming support the Innovation Act received in the House and I look forward to working with the Senate to see that patent litigation reform legislation is signed into law.”