Bipartisan Patent Bill Passes House Committee

House seeks balance to protect both individual inventors and tech giants

House Judiciary Committee Chairman Rep. Bob Goodlatte, R-Va., speaks about immigration during a news conference on Capitol Hill, April 25, 2013, in Washington, D.C.
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The House Judiciary Committee approved the Innovation Act to curtail abusive patent litigation, which promises tech companies a chance to launch devices faster, inventors a chance to defend rights to ideas and small businesses a chance to use tech gear without threats of patent infringement lawsuits.

The bill introduced by House Judiciary Committee Chairman Bob Goodlatte, R-Va., passed the committee with a 33-5 vote late Wednesday night after lawmakers spent hours on a markup as Democrats and Republicans debated whether the bill created a balance that would enable inventors with limited resources to assert their patent rights.

The bill would protect tech innovators and small businesses from "patent trolling," a practice where 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. The bill seeks to deter patent trolling by requiring the losers of a patent lawsuit to pay the winning party's legal fees, with certain exceptions.

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"Abusive patent litigation is having a significant impact on American innovation, needlessly costing small and large businesses alike tens of billions of dollars every year – resources that could have been used to create innovative new products and services," Goodlatte said in a statement.

While lawmakers debate the solution, abusive patent litigation is a problem both parties are committed to solving during this session of Congress despite the surrounding partisan gridlock. The legislation gained support on Monday when Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., and Sen. Mike Lee, R-Utah, introduced a companion bill called the Patent Transparency and Improvements Act of 2013.

The advancement of the House bill is a victory for tech companies which have lobbied heavily for new patent laws, and highlights the increasing lobbying presence of Silicon Valley in the nation's capital. Google and Apple both support the Innovation Act. Groups expressing concerns about the bill include the American Association of Universities, the Federal Judicial Conference and the American Bar Association, in part because the bill could limit the power of a court to exercise discretion about whether or not to shift fees to the loser of a patent case.

An amendment to the bill made by Rep. Hakeem Jeffries, D-N.Y., added some detail on when the legal fees for a patent lawsuit should be transferred to the loser of the case. During the markup on Wednesday, the committee rejected a Democratic substitute amendment proposed by Ranking Member John Conyers, D. Mich., and Rep. Mel Watt, D-N.C., that would have required more transparency from companies when they file infringement lawsuits, and which would have dropped the shifting of legal fees entirely from Goodlatte's bill. The Supreme Court and the Federal Circuit Court are considering examples during which fees could be shifted to the losing party of a patent lawsuit, so there is no need for Congress to intervene right now, says a staffer for Conyers' office.

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"The fee shifting provisions could take away some of judicial discretion power from the federal courts," the staffer explains. "The fee shifting issue is a concern since it could potentially deter meritorious patent holders. It could be unfair to a small business or inventor who can't afford to risk incurring the fees of the lawsuit."

Business Software Alliance Government Relations Director Tim Molino said in a statement "everyone agrees abusive patent litigation is an unacceptable drag on the economy."

"We look forward to working with Congress to continue improving the bill as it advances through the legislative process toward final enactment," Molino said.

Patent trolling cases have stalled production of tech devices by embroiling patented technology in lawsuits. Small businesses are also targeted. 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.