Bipartisan Bill To Force Patent Trolls To Pay Legal Costs

Two congressmen from opposite sides of the political aisle have joined together to introduce The SHIELD Act (H.R. 845, pdf), a bipartisan bill that will force “patent trolls” to pay legal costs if they lose a lawsuit.

Representative Peter DeFazio (D-Ore.) joined Jason Chaffetz (R-Utah) for a press conference to announce the new bill, which was reported by The Hill:

“‘Patent trolls add no economic benefit to our nation,’ Chaffetz said at a press conference on Capitol Hill. ‘They have captured a part of the system. They are exploiting it for their own personal financial gain.'”

The term “patent troll” refers to companies that do not produce anything or conduct research leading to innovation. Instead, they buy patents from inventors and from companies going out of business so they can pursue legal action against other companies they believe to be infringing on their patents.

Patent trolls dramatically increase the cost of doing business because companies have to spend millions of dollars to defend themselves in court. Money that could be going to innovation and hiring new employees gets sucked up by the legal system.

As an example, if you were a brilliant programer who invented a new computer operating system to compete against Apple and Microsoft, you would have to be very rich to introduce it to the market because so many of the things an operating system does are protected by patents.

Representative DeFazio told the press the problem is getting worse. Patent trolls are starting to threaten small businesses for doing things as simple as scanning a document and attaching it to an email:

“‘The burgeoning nature of this unproductive practice needs to be addressed,’ DeFazio said, noting that an academic study estimated that businesses paid out $29 billion to patent trolls in 2011.”

The Electronic Frontier Foundation, a non-profit that defends the digital rights of consumers against government and large corporations explains the importance of the bill:

“The SHIELD Act will help fix this problem. Under the Act, if the patent troll loses in court (because the patent is found to be invalid or there is no infringement), then it pays the other side’s costs and legal fees.”

The SHIELD Act was originally introduced by DeFazio and Chaffetz last year, but they’ve expanded it from only covering computer and software patents to covering innovation in all industries.