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House Passes Innovation Act to Make Reforms to our Patent System
Washington, D.C. – The House of Representatives today approved H.R. 3309, the Innovation Act by an overwhelming bipartisan vote of 325-91. This bipartisan bill takes steps to combat the ever increasing problem of abusive patent litigation.
House Judiciary Committee Chairman and chief sponsor of the Innovation Act Bob Goodlatte (R-Va.), Representative Peter DeFazio (D-Ore.), Subcommittee on Courts, Intellectual Property, and the Internet Chairman Howard Coble (R-N.C.), Representative Zoe Lofgren (D-Calif.), Representative Jason Chaffetz (R-Utah), and Representative Anna Eshoo (D-Calif.) applauded the bill’s passage.
Chairman Goodlatte: “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.”
Representative DeFazio: “I started working on the patent troll issue a few years ago when a small company in my district was forced to delay a product launch and put off hiring because the owner was fighting a patent troll that wanted several hundred thousand dollars to make their lawsuit go away. This is not a unique situation. Patent trolls extract at least $29 billion a year from innovators. Today’s passage of the Innovation Act in the House brings us a step closer to stopping this lucrative extortion racket. I hope that the Senate will promptly take up this bipartisan bill.”
Subcommittee Chairman Coble: “I’m pleased the House approved H.R. 3309, the Innovation Act. This bipartisan proposal will curb the tide of egregious patent lawsuits. By fortifying our patent system, we are creating more incentive for research and development, which will keep America on the cutting edge of new technologies and innovations.”
Representative Lofgren: “We do have a problem among patent assertion entities, sometimes called patent trolls, and abusive lawsuits. It’s a big issue for start-ups and entrepreneurs, and a study found more than half of these suits were against small businesses. When a meritless lawsuit is threatened, it’s easy to extort a smaller payment to make it go away. That’s what we’re trying to deal with in this genuinely bipartisan bill, with White House support, in order to stop an unnecessary drain on innovation that could better benefit the American economy and job creation.”
Representative Chaffetz: “Patent trolls contribute nothing positive to the economy. Instead, they drain the economy through frivolous lawsuits that siphon off resources from productive American innovators and companies. Small businesses and start-up companies – who are working to create jobs and grow the economy – are being suffocated by these egregious lawsuits. The Innovation Act is a commonsense solution that protects the little guy and penalizes those who file groundless claims. I appreciate Chairman Goodlatte’s leadership in tackling this issue with wide-spread, bipartisan support and getting the bill passed.”
Representative Eshoo: “When our patent system is not working in a wholesome and robust way, our collective future relative to competition, innovation and consumerism is threatened. In 2011, patent trolls cost companies that actually innovate $29 billion to challenge or settle claims, a 400 percent increase from 2005 and a clear cut-sign that something needs to change. The Innovation Act is the solution to the problem of abusive patent litigation, and I’m proud to have introduced this bipartisan legislation with Chairman Goodlatte and other Members of Congress.”
Background on the Innovation Act:
- Requires plaintiffs to disclose who the owner of a patent is before litigation, so that it is clear who the real parties behind the litigation are. This will ensure that Patent Trolls cannot hide behind a web of shell companies to avoid accountability for bringing frivolous litigation.
- Requires plaintiffs to actually explain why they are suing a company in their court pleadings.
- Requires courts to make decisions about whether a patent is valid or invalid early in the litigation process so that Patent Trolls cannot drag patent cases on for years based on invalid claims. This prevents invalid patents from being used to extort money from retailers and end users.
- When parties bring lawsuits or claims that have no reasonable basis in law and fact, the Innovation Act requires judges to award attorneys’ fees to the victims of the frivolous lawsuit. The bill allows judges to waive the award of attorneys’ fees in special circumstances. This provision applies to both plaintiffs and defendants who file frivolous claims.
- Requires the Judicial Conference to make rules to reduce the costs of discovery in patent litigation, so that Patent Trolls cannot use the high costs of discovery to extort money from small businesses and entrepreneurs.
- Creates a voluntary process for small businesses to postpone expensive patent lawsuits while their larger sellers complete similar patent lawsuits against the same plaintiffs, to protect customers who simply bought the product off-the-shelf.
- Requires PTO to provide educational resources for those facing abusive patent litigation claims.
The Innovation Act is supported by a wide range of groups that include stakeholders from all areas of our economy representing businesses of all kinds from every corner of our country including independent inventors and innovators.