The US House of Representatives overwhelmingly approved legislation Thursday intended to discourage frivolous patent lawsuits brought by patent holders with hopes of large settlements.
The Innovation Act, which passed by a 325-91 vote, has enjoyed the support of tech companies such as Google. The legislation aims to quash frivolous lawsuits by creating new requirements plaintiffs must meet to file patent infringement lawsuits.
The bill, H.R. 3309, would require plaintiffs to disclose more information about each patent allegedly violated, as well as information about the patent holder's identity. It would also limit discovery to core documents, shifting the financial burden of additional discovery from defendants to plaintiffs.
Another fee-shifting provision would allow courts to award reasonable attorneys fees and other expenses to the prevailing party if the claims brought against it were not legally justified. Under the so-called loser-pays provision, if the non-prevailing party can't pay the fees, the court would be allowed to make the fees recoverable against any interested parties that have joined the action.
Patent trolls, also known as patent assertion entities, are created to extract licensing fees from other companies by threatening litigation rather than create products based on the patents they hold. Supporters of the bill say such lawsuits are a drain on company resources.
"The tens of billions of dollars spent on settlements and litigation expenses associated with abusive patent suits represent truly wasted capital," said Rep. Bob Goodlatte (R-Va.), the bill's sponsor. "The patent system was never intended to be a playground for litigation extortion and frivolous claims."
Opponents of the legislation argue that it would create hurdles that would only stymie small inventors looking to defend their patents from large, well-funded companies.
"Every time you hear the word 'troll,' what you're hearing is a manipulation of this debate by some very special interests, powerful interest, who want to steal from the independent inventor," said Rep. Dana Rohrabacher (R-Calif.), according to The Hill.
Google, which has been a vocal supporter of the Innovation Act, commended the House on the bill's passage.
"This legislation will stop trolls from abusing the patent system, ensuring that America's productive business are investing in innovation and growth, not patent litigation," Google general counsel Kent Walker said in a statement.
The Computer and Communications Industry Association (CCIA), a tech advocacy group whose membership includes eBay, Facebook, Google, and Microsoft, called the legislation "a commendable, bipartisan effort to grow innovation, jobs and the economy."
"This legislation would make it less profitable for patent trolls to sue, and give targets of unfair patent infringement claims better tools to fight back," CCIA CEO Ed Black said in a statement.
Intellectual Ventures, a prominent patent-holding company linked to many infringement lawsuits, said the bill has defects in need of attention.
"We're not opposed to all, or even most measures in H.R. 3309, but even the best of them need a great deal more refinement and we are disappointed the House rushed to pass this bill," Intellectual Ventures' chief policy counsel Russ Merbeth said in a statement. "We hope the Senate recognizes the need for a deliberate and measured approach as they consider the Patent Transparency and Improvement Act."
The Innovation Act now moves on to the Senate Judiciary Committee, which is chaired by Sen. Patrick Leahy (D-Vt.). Leahy has penned his own patent-reform bill and set a committee hearing on the issue for December 17.