House Judiciary Chairman Goodlatte Seeks to Curb 'Patent Trolling'

Bipartisan House bill would increase patent transparency, decrease lawsuit defense costs.

House Judiciary Committee Chairman Rep. Bob Goodlatte, R-Va., gestures as he speaks on Capitol Hill in Washington, Tuesday, June 18, 2013.

Legislation introduced by House Judiciary Committee Chairman Bob Goodlatte, R-Va., to protect tech innovators and small businesses from "patent trolling" is expected to pass the House Judiciary Committee Wednesday.

By + More

Patent law jumped back onto the congressional agenda just a week after the government returned from the shutdown when House Judiciary Committee Chairman Bob Goodlatte, R-va., introduced the Innovation Act, designed to protect tech innovators and small businesses from abusive patent litigation.

During an event Thursday in Washington, D.C., Goodlatte said he was optimistic about the bill, noting that Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., and the White House also agree something needs to be done to prevent abusive patent litigation. A profitable practice called "patent trolling" has grown in recent years, Goodlatte explained, during which an entity uses a patent not to build or improve an invention, but to threaten businesses with infringement lawsuits to extort a settlement as an alternative to expensive litigation.

[READ: Germany Calls U.S. on Merkel Phone Snooping]

If a hearing on the legislation slated for Oct. 29 goes well, Goodlatte said he expects to move the bill "to a markup fairly soon." Goodlatte introduced the Innovation Act on Wednesday with bipartisan support from fellow sponsors Rep. Peter DeFazio, D-Ore., Rep. Howard Coble. R-N.C., and Rep. Zoe Lofgren, D-Calif.

"Everyone from independent inventors, to start-ups, to mid and large sized businesses face this constant threat," Goodlatte said. "The tens of billions of dollars spent on settlements and litigation expenses associated with abusive patent suits represent truly wasted capital – wasted capital that could have been used to create new jobs, fund R&D, and create new innovations and technologies."

The House bill's provisions to make patent trolling more difficult include steps to decrease the litigation burdens on companies that are sued and increase the due diligence and transparency requirements of a company that makes a patent lawsuit. The bill also includes other measures to help small businesses prepare to defend themselves in a patent lawsuit.

Leahy's office on Wednesday commended Goodlatte's introduction of the Innovation Act, and announced he is working on similar patent legislation in the Senate with Sen. Mike Lee, R-Utah, to pair with the House bill.

"This is an issue on which Chairman Goodlatte and I share a common goal," Leahy said in a statement. "I am continuing to develop legislation in the Senate with Senator Lee and others. We will work with all interested Senators to produce the strongest possible legislation that will help American innovators and inventors succeed."

Patent trolling cases have stalled production of tech devices by embroiling patented technology in lawsuits. Patent assertion entity Innovatio in 2012 received out-of-court settlements from small businesses that used patented Wi-Fi routers instead of targeting companies manufacturing those patented devices, including Cisco. Innovatio successfully defended itself in a lawsuit against Cisco in February 2013, denying that company's accusations that it engaged in patent trolling by threatening small businesses.

[READ: Spymaster: U.S. Business Needs More Protection From Chinese Hackers]

The tech industry runs on the patents of its devices and business methods, so tech businesses including Twitter and Google have been staunch advocates of solutions to combat patent trolls. Lofgren's district is located in Silicon Valley.

"America's innovation economy is dependent on a functional patent system that promotes invention and competition," Lofgren said in a statement.

Raising stakes against a plaintiff could make it difficult for inventors and tech startups to defend their computer or software innovations against larger competitors. Google and Apple purchase hundreds of patents as part of mergers, or patent tech concepts without plans to produce anything from them.

During the event on Thursday Goodlatte said the bill would not prevent the assertion of valid patents.

"You will find this process makes it easier to enforce your patent rights," Goodlatte said.

The White House called for a need to prevent frivolous patent lawsuits in June by announcing seven executive actions, and five legislative priorities.