Patent Quality Improvement Act hits Congress

New legislation aims to save technology companies "billions of dollars in litigation" with a permanent patent review process.

New legislation introduced to Congress on Monday aims to change the patent review process to curb the influx of new patent-related lawsuits.

Sen. Chuck Schumer, a Democrat from New York, presented a new bill that amends 2011's America Invents Act by making permanent a temporary revision that allows the U.S. Patent and Trademark Office to review a patent after it has been granted.

The new legislation, called the Patent Quality Improvement Act, would also change language for what types of businesses are covered under current America Invents Act, something Schumer says would better include technology start-ups.

"The legislation that I'm introducing in Congress today will finally crackdown on patent trolls that are preying on our nation's technology companies," Schumer said in a statement. "This bill will save these companies billions of dollars in litigation fees by allowing the Patent and Trademark Office to review unwarranted claims in lieu of expensive lawsuits."

The bill comes about a week after Schumer announced plans to "crackdown" on what he referred to as a "growing problem" of patent trolling. Informally, those "trolls" are companies that licenses patents but doesn't actually have any other business. Such non-practicing entities (NPEs) cost companies $29 billion in 2011, with the average settlement costing a "small to medium" company $1.33 million, Schumer said.

"Patent litigation abuse has reached a crisis level - innovators, businesses of all sizes, and even individual end users are being targeted by firms that do not produce anything, but simply exist to bring lawsuits," Consumer Electronics Association President and CEO Gary Shapiro said in a statement applauding the bill.

The legislation, which still has to go through several steps before it becomes law, is part of a larger effort to reform patents and the patent system. Technology companies including Google, BlackBerry, and others are asking the Federal Trade Commission and the U.S. Department of Justice to scrutinize NPEs, which they say are "hurting" consumers and small businesses.

That argument has been a hot-button topic in the patent community.

Last week, research from patent mega-aggregator Intellectual Ventures said that the majority of company leaders it polled believed patents were a good thing for innovation . Just days later, a similar study out of the Santa Clara University School of Law found that 90 percent of the companies it polled said claims from businesses looking to make money off of patents were a "distraction."

Not everyone is convinced the review system the new legislation aims to keep in place are a good thing.

"The problem with a system like this is that, in all likelihood, most patents reviewed will survive and actually become more formidable as a result," says Brian J. Love, an assistant professor at the Santa Clara University School of Law. "When patents do survive additional scrutiny, their owners then have a strong rhetorical argument: this patent is so strong it survived PTO scrutiny not once, but twice...thus, under the guise of eliminating bad patents, we often end up making them more troublesome."

Updated at 3:00 p.m. PT with additional comment on the legislation.

 

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