The bipartisan White House-backed Innovation Act (H.R. 3309) passed the House 325 to 91. The bill seeks to cull the numerous patent cases, commonly referred to as troll cases, that have little to no evidence and rely solely on litigation prowess over small companies. Non-practicing entities (NPEs), known to laymen as patent trolls, are often shell companies with few employees that sue businesses and end users for patent infringement, leaving defendants the option to fight the case and rack up exorbitant fees or to settle. The Innovation Act seeks to limit patent troll legality, concurrently bolstering legitimate patent infringement cases.
Patent litigation reform is a top priority of the National Retail Federation (NRF), says Stephen Schatz, senior director. “We are pleased the House has acted and expect further action from the Senate.” Beth Provenzano, senior director for Federal Government Relations, explains: “We are very focused on patent litigation reform because we have heard from our members that they are being targeted by patent trolls.” Attacks range from vague pre-litigation demand letters to lawsuits that can take millions of dollars and several years to litigate. “The patent trolls’ tactics stymie technological innovation and the economic growth it creates throughout the retail industry. Our members are innocent victims that are being targeted on technologies they are utilizing,” she notes. “The manufacturers are in the better position to litigate because they are the creators of the technology. We are encouraged the House recognized the growing problem and moved quickly.”
The Innovation Act was introduced by Rep. Bob Goodlatte (R-Va.) in late October. If the Senate passes the bill with no further amendments it will increase transparency in patent cases, reduce fees defendants accrue and empower small company defendants. Several amendments that changed the nature of the bill were proposed, but with the exception of one amendment removing the fee-shifting provision and allowing defendants to pass off their litigation costs onto the plaintiff if they win the case, most of the bill’s proposed amendments were defeated. The fee-shifting amendment was defeated with a vote of 199 to 213.