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IP Alert: Possible Changes Coming to Patent Laws

     

This year, there has been discussion among legislators, and some accompanying action, regarding the need for changes to the existing patent laws. Most folks would probably agree that patent laws are necessary to promoting innovation. Of course, the types of inventions that qualify for a patent and the scope and enforcement of the corresponding laws must balance a fine line of encouraging innovation without stifling competition.  Unfortunately, the progress on these matters has been rather slow, but that seems to be the case for most things in the nation’s capital these days. And, with so many competing interests at stake, it has been rather difficult for parties to come to a consensus as to what constitutes the appropriate compromise.

 

There are two specific pieces of legislation on the table that are worth noting. These acts are called the Innovation Act, which is the House version, and the Senate’s PATENT Act, which is short for “Protecting American Talent and Entrepreneurship Act.” The text of these acts include various new provisions, which is explained here as “covering heightened pleading requirements; mandatory early disclosures regarding interested parties, patent ownership, and infringement allegations; limitations on discovery; early motion practice; stays on actions against end-users and customers; fee-shifting; and recovering fee awards from financially interested parties,” among several other proposed changes to the existing laws.

 

In a nutshell, one of the primary goals of the proposed legislation is to prevent “patent trolls” from continuing to engage in costly, excessive, and often meritless patent litigation. A reduction in baseless patent litigation is a necessary step, as many of these trolls are engaging in what essentially amounts to extortion. More specifically, many of the trolls purchased these patents, meaning they were not the original inventors or filers, and most do not even engage in the development of any of the technology associated with the patent. Nonetheless, because they are the “rightful” holder of the patent, they threaten to initiate litigation if the person or company who is supposedly infringing upon the patent refuses to pay some sort of compensation or fee, usually a licensing fee. These aggressive enforcement tactics and the ensuing costs of addressing the demands and possible litigation pose quite a threat to the survival of the companies that these trolls target, which are frequently involved in high-tech industries, biotechnology, and pharmaceuticals.  

 

On the other side of the coin, those against the passage of these laws are concerned that the provisions will harm individuals, startups, and smaller businesses that hold patents for their inventions. Specifically, because the proposed changes are aimed at tightening patent litigation rules, the enforcement process may become too difficult and expensive for companies that may not have access to certain resources.

 

As with most intellectual property issues, it is always tricky figuring out how to protect innovation while also promoting it, so it will be interesting to see how this all shakes out.

 

 

Please share your thoughts on this issue in the comments.