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US Overwhelmingly Passes "Innovation Act" against Patent Trolls

50. Patently Legal
The US House of Representatives overwhelmingly passed the "Innovation Act" bill on Thursday aimed at discouraging frivolous lawsuits by patent holders. The move was backed by companies like Apple, IBM, Cisco and Google. House Judiciary Committee Chairman Bob Goodlatte sponsored the bill which won strong bipartisan support in passing by a 325-91 vote. Goodlatte said his bill "takes meaningful steps to address the abusive practices that have damaged our patent system and resulted in significant economic harm to our nation."


The bill, which still requires Senate approval, marks the latest effort by technology companies to constrain the entities they deride as "patent trolls." It would require patent holders who file lawsuits to disclose more information upfront on the patents involved and give judges more discretion to limit the legal work companies must go through to defend themselves.


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"A small company in my district was forced to delay a product launch and put off hiring because the owner was fighting a patent troll that wanted several hundred thousand dollars to make their lawsuit go away," said Rep. Peter DeFazio (D., Ore.) before the vote. "This is not a unique situation."


Goodlatte added that "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," he said.


The Innovation Alliance, which represents Qualcomm, Tessera Technologies, InterDigital and others, said the vote was a disappointment.


A Note about Patent Trolls


A 2011 study showed that Patent Trolls cost tech companies $29 Billion and a 2012 study made the case that patent trolling was out of control. To date, Apple remains the #1 Target of Patent Trolls.


The FTC is now examining the practices of patent trolls or Patent Assertion Entities (PAEs) which are firms with a business model based primarily on purchasing patents and then attempting to generate revenue by asserting the intellectual property against persons who are already practicing the patented technologies. The FTC is conducting the study in order to further one of the agency's key missions—to examine cutting-edge competition and consumer protection topics that may have a significant effect on the U.S. economy.


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Sources: Reuters and The Wall Street Journal




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