A Bill to Fight the Patent Troll

“Stop patent trolls, join the fight.”

Patent trolls secure patents and use them aggressively to leverage monetary settlements from unsuspecting businesses while never creating or selling anything themselves.  That is, their patent-troll4contribution to the nation’s GDP is zero.  The patent troll throws a wide net making broad claims of infringement based on sketchy or limited substance.  They are single-handedly killing innovation in the United States and cost small and medium-sized $25 to $30 billion annually.

Rep. Bob Goodlatte (R-VA) is the chairman of the House Judiciary Committee and he and his bi-partisan coalition crafted the Innovation Act which is bill (HR 3309) to thwart the legal playbook of the patent troll.  A troll’s greatest leverage is the cost of litigation as a threat to demand and extract a quick settlement from the defendant.  Usually they start with their smaller targets and settle for pennies on the dollar.  There is a two-fold strategy with this method: 1) begin the validation process with a settlement, and 2) use the settlement to fund on-going litigation expenses.

The bill is designed to curtail patent troll lawsuits by making a number of changes to how patents are litigated. Below are the key components of the Innovation Act from Rep. Goodlatte’s press release dated November 20, 2013:  

Key Components of the Innovation Act: (Text from Rep. Goodlatte’s press release).

• Target Abusive Patent Litigation: The bill targets abusive patent litigation behavior and not specific entities with the goal of preventing individuals from taking advantage of gaps in the system to engage in litigation extortion.  It does not attempt to eliminate valid patent litigation.

• Protects the Patent System: The patent system is integral to U.S. competitiveness.  This legislation does not diminish or devalue patent rights in any way.

• Increases Transparency: This legislation includes heightened pleading standards and transparency provisions. Requiring parties to do a bit of due diligence up front before filing an infringement suit is just plain common sense. It not only reduces litigation expenses, but saves the court’s time and resources. Greater transparency and information is a good thing and it makes our patent system stronger.

• Modernizes Fee Shifting: The legislation includes a modernized version of Section 285 fee shifting that is fair, clear and will ensure consistent judicial determinations.

• Provides Greater Clarity: The legislation provides for more clarity surrounding initial discovery, case management, joinder and the common law doctrine of customer stays.  The bill works hand-in-hand with the procedures and practices of the Judicial Conference and the courts.

• Small Business Education: The bill provides for small business education and outreach by the U.S. Patent and Trademark Office.

HR 3309 has the normal legislative “trip.”  It first needs to make its way out of Committee to the House floor for a vote.  Assuming the House supports the bill, it still needs to be introduced by Harry Reid (Senate Majority Leader) and voted on by the Senate before it gets to the President’s desk.  This all seems a bit daunting given the recent ineptness of our politicians to do their jobs.

I do believe patent trolls are in the apolitical “bucket” so maybe this proposed legislation can bring parties together to upgrade the legal environment when it comes to this extortionist behavior.

from Douglas MacFaddin’s Tech Market Page http://dougmacfaddin.org/a-bill-to-fight-the-patent-troll/

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Published by: Doug MacFaddin

Douglas Willis MacFaddin was born June 16, 1961 in the Miamisburg Hospital to Patricia Ann MacFaddin and Richard Willis MacFaddin. My mother’s maiden name is Morrison and she is the youngest of seven children who were raised in Lycippus, PA. My father was the second of four children and was a twin. He was raised in the town of Viola, DE. At the time of my birth, my father worked at the Mound Laboratories in Miamisburg, Ohio in research. Mound was an Atomic Energy Commission facility for nuclear weapon research during the Cold War. My mother made a home for our family. My father passed away in 1991 and my mother is currently living in Avon, CT. Doug MacFaddin is the oldest of five children (Doug, R. Stuart, Anne Marie, Megan and Mary (Heather)). I lived in Ohio for two years, spent the next seven years in Murrysville, PA (outside of Pittsburgh), moved to Little Silver, NJ and relocated my senior year in high school to Avon, CT. My four siblings currently live with their families in Avon, CT and are members of St. Ann’s Church. I attended Mother of Sorrows School in Murrysville, PA. In NJ, I attended Little Silver Point Road School, Markham Place School and Christian Brothers Academy (CBA) in Lincroft, NJ for three years. My senior year, I attended Avon High School and I then spent the next four years at Union College, Schenectady, NY. I received a BS in Industrial Economics and graduated in June 1983. While at Salomon Brothers, I was asked to attend a two-week seminar for Public Finance at the University of Michigan in 1986. In Little Silver, I was involved in Troop 126 where I achieved the rank of Life Scout and was both a Patrol Leader and a Senior Patrol Leader. I also was an alter boy at St. James Catholic Church and spent summers a the Ship Ahoy Beach Club in Seabright, NJ and caddying at the Rumson Country Club. At Christian Brothers Academy, I wrestled for the varsity squad for three years. I took second in the districts my junior year and went on to the regionals. I also ran on their cross country team freshman year and was part of the CBA Colt team that hasn’t lost a duel meet since 1973. My senior year at Avon, I won the wrestling States (S). I went on to wrestle at Union College and qualified for the Div III nationals twice (1981, 1982) and was co-captain both years. My senior year at Avon, CT, I also won the States (S) in pole vaulting. It was the first time Avon High School had a state champ in two sports in the same year. During my four years, I earned nine varsity letters between wrestling, track and football. In 1979, I was accepted into The National Honor & Merit Scholars Society. Upon graduating from Union College, I accepted a position at Salomon Brothers Inc in August 1983. I was an analyst in their Public Finance department at One New York Plaza. I lived in Park Slope, Brooklyn and spent the next four years working at Salomon Brothers. As a result of Black Monday, October 19, 1987 the Public Finance Department of Salomon Brothers was jettisoned to conserve capital. By November 1, 1987, I was working at Dean Witter Reynolds in the new Public Finance Department made up of many of my former Salomon Brother’s colleagues. The new Department was located on the 57th floor of 2 World Trade Center.

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