US House of Representatives Passes Innovation Act

On December 5, 2013, the House of Representatives took a further step towards patent reform by passing the Innovation Act by a 325-91 vote. Designed to improve the US patent landscape, the Innovation Act contains several measures designed to discourage abusive tactics favored by non-practicing entities (aka patent trolls). A few of the notable provisions are:

  • Fee shifting: The loser of a patent infringement suit is now responsible for the legal fees of the prevailing party unless the loser can show that the grounds for suit were reasonable. This would discourage patent trolls from initiating suits premised on shaky grounds.
  • Increased transparency: The Innovation Act now requires the party bringing a patent suit to identify the patent holder and provide greater details as to how the patent is allegedly infringed.
  • Greater protection for end-users against suit: A common tactic for patent trolls is to go after the consumer. For example, the owner of a patent with broad claims for wi-fi services can go after a coffee shop who provides free internet for their clientele via a wireless router. Often times, the alleged infringer will pay a settlement rather than risk lengthy and expensive litigation. The Innovation Act contains a customer-suit exception to counteract this. Under this provision, the maker of that router, most likely a large corporation better suited and funded to combat the troll, can step in via a separate action. During that time, the first suit against the little guy will be stayed.

Chief-sponsor of the Innovation Act, Rep. Bob Goodlatte (R-VA) said of the bill:

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.

So will the Innovation Act help curb patent abuse in the US? That remains to be seen.


Related insights