House Passes Innovation Act: Enough to Save Patent System?

The U.S. House of Representatives passed the Innovation Act yesterday, a bill that intends to help reform the troubled American patent system. The bill, which passed by a vote of 325-91 with bipartisan support, will now go to the Senate (where it expects to pass), and then to the White House. Supporters hope the bill will save the current patent system plagued by low-quality patents and trolls, while others suggest it is merely a small solution for a much bigger problem.

The swift vote of the bill comes only six weeks after it was introduced by Judiciary Committee Chairman Bob Goodlatte (R-Virginia).

However, the bill “has divided members of the startup and small business communities,” explains Fox Business. “While some argue this is a strong step toward ending abusive litigation practices, others view the bill as harmful to small inventors, who may find it more challenging and expensive to defend their patents.”

“If the Innovation Act becomes law, will it actually do anything to fix a patent system that a prominent judge has described as ‘dysfunctional?’ Recall that Congress also passed ‘patent reform’ in 2011 to little practical effect,” suggests GigaOM.

While the 2011 America Invents Act (AIA) failed to crack down on the financial incentives of patent trolls, the Innovation Act may lead to different results.

“The AIA was stripped of most provisions that would have made a significant dent in the troll problem,” notes Brian Love, Santa Clara University law professor and patent expert. “The Innovation Act, by contrast, specifically addresses certain abusive patent assertion activities. It isn’t a complete solution, but it is a meaningful step in the right direction.”

The post lists several measures of the Innovation Act designed to impact patent trolls:

  • Protection for customers: Right now, a troll can go after anyone using a router, a scanner or other basic technology it claims to own. The new law, however, allows the manufacturer of the technology — typically big companies like Cisco or Google — to step in and tangle with the troll. During this time, the troll’s lawsuits against the customer are halted (meaning an easy smash-and-grab is less possible).
  • Fee-shifting: A patent plaintiff will have to pay the defendant’s legal costs if they lose and if the lawsuit was “unreasonable.” That last part is not easy to establish, but the new rule will give second thoughts to some trolls, and will give some defendants an incentive to fight.
  • New discovery rules: right now, a troll can torment its victim with expensive discovery requests — requirements that the defendant produce emails, business records and other evidence. The troll, since it’s a shell company, doesn’t have anything to produce itself. The new rule moves the discovery phase down the road while a judge examines the patent claims, meaning that it’s harder for the troll to use discovery as blackmail weapon.

However, GigaOM suggests the bill does little to address the growing problem of low-quality patents.

“Significantly improving patent quality is no easy task and would likely require fundamental changes to patent law, to the PTO, and to procedures for examining patent applications that aren’t politically feasible, at least at present,” adds Love.