U.S. House panel takes up bill targeting 'patent trolls'

Reuters

WASHINGTON, Nov 20 (Reuters) - A congressional panel onWednesday took up a bill targeting patent "trolls," companiesthat buy or license patents from others and then aggressivelypursue licensing fees or file infringement lawsuits.

The House of Representatives Judiciary Committee wasconsidering a measure that appeared to have the best chance ofreining in patent assertion entities, known derisively as"trolls." The White House in June urged Congress to take stepsto curb abusive patent lawsuits that have sprung up in recentyears, particularly in the technology sector.

The patent reform bill, introduced by Rep. Robert Goodlatte,was expected to clear the committee and proceed to the fullHouse of Representatives after stripping out a measure whichwould have changed how the U.S. Patent and Trademark Officereviews software patents to determine if they are valid.

The bill aims to increase transparency in the patentlitigation system.

In one case, a patent assertion entity, or PAE, demandedlicensing payments from retailers who provided services tocustomers such as free Wi-Fi.

"Within the past couple of years we have seen an exponentialincrease in the use of weak or poorly granted patents againstAmerican businesses with the hopes of securing a quick payday,"said Goodlatte, a Virginia Republican, who chairs the committee.

"These suits target a settlement just under what it wouldcost for litigation, knowing that these businesses will want toavoid costly litigation and probably pay up," Goodlatte said.

The bill requires judges hearing patent cases to award feesto the winner in an infringement lawsuit, unless the judgedecides that the loser's position was "substantially justified"or some other circumstances exist.

The bill would require companies filing infringementlawsuits to provide specific details on what patent is infringedand how it is used. It also would allow tech companies to jumpinto lawsuits filed against their customers. For instance, acompany that makes Wi-Fi equipment could defend a bakery accusedof infringing Wi-Fi patents by simply installing a router.

Goodlatte has worked on the patent issue with hiscounterpart on the Senate Judiciary Committee, Vermont DemocratPatrick Leahy.

Leahy, along with Senator Mike Lee, a Republican from Utah,launched a bill on Monday that would require patent holders todisclose ownership when they sue and would allow manufacturersto step into lawsuits to protect customers accused of infringing.

While similar in some respects, the House and Senate billsalso have significant differences that would need to be ironedout by lawmakers if each is passed.

Other proposals are circulating on Capitol Hill, and theFederal Trade Commission has a study underway the impact oncompetition of abusive patent litigation.

Patent experts such as Adam Mossoff, who teaches at GeorgeMason University School of Law, have urged Congress to becautious in changing patent law because of the danger of hurtingcompanies whose patents are genuinely infringed.

Internet companies largely support the Goodlatte bill, andthe effort is backed by Cisco Systems Inc, Apple Inc, Google Inc and other technology powerhouses.

To read the text of H.R. 3309, Goodlatte's "Innovation Act,"see

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