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Goodlatte Brandishes New Weapon in Battle Against 'Trolls'

House Judiciary Committee Chairman Bob Goodlatte (R-Va.) introduced a patent litigation reform bill, the INnovation Act (HR 3309) targeted at so-called patent trolls on Oct. 23. Cable operators were among those applauding the bill and pledging to work for its passage.

The bill is aimed at preventing "individuals from taking advantage of gaps in the system to engage in litigation extortion" and not to discourage "valid" patent litigation. Goodlatte's office said the bill does not "diminish or devalue patent rights in any way."

The bill includes heightened pleading standards and shifting of fees to the losing party. "It not only reduces litigation expenses but saves the court's time and resources. Greater transparency and information is a good thing and it makes our patent system stronger," Goodlatte's office said on its Web site.

Goodlatte said the bill dovetails with reforms made in the last Congress in the America Invents Act.

"Abusive patent litigation is a drag on our economy," he said in announcing the bill. "Everyone from independent inventors, to start-ups, to mid- and large-sized businesses face this constant threat. The tens of billions of dollars spent on settlements and litigation expenses associated with abusive patent suits represent truly wasted capital — wasted capital that could have been used to create new jobs, fund R&D, and create new innovations and technologies."

The reaction from industry and reform advocates was swift and filled with lots of applause.

"We applaud Chairman Goodlatte on the introduction of bipartisan patent legislation," said the National Cable & Telecommunications Association. "The bill will help deter patent trolls and put an end to unjustified patent litigation, enabling American companies to focus on innovation, job creation and economic growth. We look forward to working with Chairman Goodlatte and the bipartisan cosponsors towards passage of this important legislation."

"We applaud Chairman Goodlatte for taking this strong stance toward reforming the patent system," said Public Knowledge. Not a surprising reaction since PK helped draft the bill, according to Charles Duan, director of PK's Patent Reform Project. "Abusive practices in patent litigation are disappointingly commonplace today, due to an unbalanced patent litigation playing field that makes it easy to bring a case but disproportionately more difficult to defend. The bill introduced today addresses several loopholes that allow for these abusive practices and create that unbalanced playing field."

"Cisco applauds introduction of the Innovation Act, legislation which aims to address the growing problem of patent assertion entities (often called patent trolls)," said Cisco general counsel Mark Chandler. "According to a new study released this week, the problem is getting worse.  Nearly 60% of new patent lawsuits are being filed by patent assertion entities, up from 25% in 2007. They are targeting legitimate businesses with threat letters and costly lawsuits, in the hope for a quick and easy settlement.  According to one estimate, these profiteers cost American businesses $29 billion in 2011.  This is a problem that cries out for legislative action.

"CEA applauds the introduction of the Innovation Act of 2013," said Consumer Electronics Association president Gary Shapiro. "Frivolous patent litigation is a massive problem, and it is getting worse. Patent trolling had ballooned into a billion dollar industry dedicated to punishing innovators, undermining the integrity of the patent system, killing jobs and damaging our economy. This bill contains smart and targeted reforms that will help promote continued innovation in the U.S. and make life difficult for those who seek to abuse our patent system.

"This bipartisan legislation will help curb abusive patent litigation by requiring those filing suits to supply more details about their infringement claims and reveal who is paying for their legal antics," said Computer & Communication Industry Association president Ed Black. "We appreciate the leadership by Chairman Goodlatte and the ongoing efforts by Chairman Leahy in the Senate to address the growing drain on innovation and our economy by taking away some of the tools patent trolls are using to harm innovators."

Earlier this year, Sen. John Cornyn (R-Tex.) introduced the Patent Abuse Reduction Act, his own take on combating "abusive patent litigation" by "trolls." "I want to extend my thanks and appreciation to Chairman Goodlatte for his attention to this issue," said Cornyn in a statement, "and for his focus on common sense solutions like heightened pleading, discovery reform and fee shifting. I look forward to continuing to work with him and others to get a bill through Congress and to the President's desk."

Sounding a note of caution was the Innovation Alliance, which said that it supported the principle, included "balanced" fee shifting and heightened plea standards. But it said some parts of the bill have "serious" negative, though unintended, consequences on inventors and the economy and invite abuse by patent infringers. "Our concerns stem from the fact that the bill's provisions as drafted, taken together, will significantly shift the balance of patent ownership and licensing power from small companies and inventors to larger, better financed incumbent companies," said Alliance director Brian Pomper.