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New House Bill Targets Software Patent Litigation

Posted On: Aug. 2, 2012   By: Scott A. McKeown
loser pays patent litigationNew Bill Seeks to Recover Costs of “Egregious Legal Disputes”

Since the enactment of the America Invents Act (AIA) in September of 2011, the “patent reform” embodied by the AIA has been slowly rolling out. In fact, the bulk of the truly significant changes to patent law are still to come. These changes include the change over to the first inventor to file model in March of 2013, and the kick off of the new post grant patent proceedings next month. With so much change on the immediate horizon it would seem premature to consider further changes to patent law until the last round has had time to take effect. 

Evidently at least one Congressman feels that the AIA does not go far enough to combat frivolous “troll” lawsuits. Congressman Defazio of Oregon is sponsoring a bill entitled “Saving High-Tech Innovators From Egregious Legal Disputes Act of 2012.” The bill proposes that the costs (including attorney fees) of patent lawsuits relating to hardware and software should be recoverable from the Patentee should the court find that the Patentee did not have a reasonable likelihood of succeeding on the merits. (bill here)

Interestingly, the bill offers a fairly expansive definition of software as  ”any process that could be implemented in a computer regardless of whether a computer is specifically mentioned in the patent.” This definition would seem to encompass a fair amount of processes that have no relation to hardware and software patent disputes.

While Congressman Defazio’s effort is no doubt well intentioned, it fails to recognize that fighting a patent suit to a final determination can costs tens of millions of  dollars. Very few companies will gamble with that kind of expense/distraction. Assuming this bill had a chance of passage (very unlikely to say the least), the possibility of recovering fees for the more specious patent assertions would not upset the current troll business model in any significant regard.

The true problem is that the economics of fighting vs. settling patent lawsuits, especially where the Patentee is a non-practicing entity with a contingent fee arrangement with their trial counsel, is a no-win situation for high-tech innovators. What is really needed is a low cost alternative to patent litigation that will break the troll/contingency business model. In my opinion Congress has already devised that system, and it kicks off next month. …let’s give it a chance.


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