updated 04:28 pm EST, Wed February 27, 2013
New act proposes patent trolls pay legal costs if suit lost
The second bill intended to quash "patent trolls" has been introduced by the sponsors of the original failed bill. Representatives Jason Chaffetz (R-UT) and Peter DeFazio (D-OR) are sponsoring the SHIELD act of 2013, which intends to create a "loser pays" system where certain patent holders will be forced to pay the defendant's legal bills in entirety if the holder loses the suit. Debate on the bill may be held up by the possible upcoming Federal budget cuts, but the representatives believe it will come up for a hearing fairly soon.
Rolling out the new bill, Chaffetz said that "patent trolls add no economic benefit to our nation. They have captured part of the system, and they're exploiting it for their own financial gain. They're hampering the innovation that our country deserves. Literally every segment of our society's business is being attacked by these patent trolls."
Co-sponsor DeFazio noted the wave of notifications demanding payments for scanning documents to email, and demanding payment for a license to do so. He noted that they are sent to "small businesses that they think might have scanners and tell them they've got to pay $20,000 if they want to keep using their scanners and attaching e-mails."
The bill as filed allows defendants to file a motion to make the judge rule that the patent holder is a certain type of patent holder that is subject to the provisions of the bill. Patent owners can be defined as non-practicing unless the plaintiff is an inventor or original patent holder, is actually using the patent, or a university. One possible loophole for exploitation is "technology transfer organizations" are ill-defined, and on the list for exemptions from non-practicing entity status.
The bill proposal is generally well received by the technology company. The Coalition for Patent Fairness, including Adobe, Cisco, Dell, Google, Oracle and Verizon said in a statement that "patent trolls can't have a free roll of the dice, and SHIELD would help to ensure that they do not."
The Application Developers Alliance feel the bill is a good start, but don't think it goes far enough. Alliance President Jon Potter said that small developers "need more relief than the SHIELD Act offers. A quicker and cheaper program for challenging trolls' patents in the Patent and Trademark Office is needed as an alternative to litigation."