Category: Patent

The bill introducing the Saving High-tech Innovators from Egregious Legal Disputes (Patent SHIELD Act, H.R. 6245) attempts to bring a “loser pays” system for software and hardware patent lawsuits, purportedly to protect startups from plaintiffs that want to force settlements through the threat of high legal bills. The Patent SHIELD Act was introduced by Peter DeFazio (D-OR) and Jason Chaffetz (R-UT).

The bill introduces a new 35 U.S.C. 285A, which reads, in relevant part:

“(a) In General- Notwithstanding section 285, in an action disputing the validity or alleging the infringement of a computer hardware or software patent, upon making a determination that the party alleging the infringement of the patent did not have a reasonable likelihood of succeeding, the court may award the recovery of full costs to the prevailing party, including reasonable attorney’s fees, other than the United States.”

Hmmm. Let’s parse this one.

• “Notwithstanding section 285…” Section 285 allows the court to award attorneys’ fees to the prevailing party “in exceptional cases.” I guess any litigation surrounding a computer software or hardware patent is now supposed to be an “exceptional case.” That’s … odd. What about the startups whose product or service does involve patents but does not involve computer patents?
• “upon making a determination that the party alleging the infringement of the patent did not have a reasonable likelihood of succeeding…” Um … when is this determination made? At the time of the complaint? At the time of the verdict? Somewhere in the middle? A plaintiff, up until now, could bring a lawsuit in good faith, regardless of whether the suit ultimately won or lost; now, legitimately aggrieved plaintiffs have to worry about whether losing a suit is the contingency that brings costs and attorneys’ fees into play for them? That chills the blood of the legitimately aggrieved plaintiff, to put it mildly, which has the effect of eviscerating the patent enforcement system, since a plaintiff who worries that his/her costs will be increased dramatically by losing his/her legitimate suit through the award of costs and attorneys’ fees won’t even start the process.
•   Nowhere does the bill allow the prevailing plaintiff — the legitimate patentee — to recover costs and fees, which makes this bill extraordinarily one-sided.

The gentle, bipartisan language at the start of this new bill thus masks a bill that, if it becomes law, has the potential to punish a legitimate plaintiff who makes a good-faith decision to litigate the infringement of a legitimate patent.

While I absolutely agree that patent trolls need to go away, I think this is absolutely not the way to achieve that end.

Apple won. Bigtime.

Their patents officially declared infringed by a jury, Apple walked away from the Apple/Samsung trial with an enormous award.

Not quite sure what I think of a billion-dollar patent infringement award. I agree, of course, that patents should be enforced, and infringers should be held liable for their infringements, but a billion dollars?? I guess it hits Samsung hard enough in the wallet to be felt, but GEEZ.

This is the first major overhaul of the patent system since 1952, and major it is. Here’s a line-up of some of the changes that the new law puts into effect.

The Biggie: Today, the patent system in the USA is a so-called “first-to-invent” system; an inventor who wants to prove that they invented something first can easily force another party into a protracted legal battle. However, the first-to-file system put into place by the America Invents Act would make things much clearer. In its most general terms, if you filed for the patent first, you get the protection.

Post-Grant Review: The Act creates a new process by which to challenge a patent within nine months of its issuance by presenting evidence directly to the Patent and Trademark Office itself, which will review the merits of the argument.

Fee Collections: The Patent Office can now set its own fees rather than relying on Congress to set reasonable fees for it. Congress will continue to have some budgetary power, but fees collected above the Patent Office’s budget will be placed into escrow, and the Patent Office can petition for their release. Fees will go up for some filers, but small entities may very well see fee reductions.

The bill does NOT include any new process for determining damages included in the America Invents Act. Jury awards for patent violations may continue to be huge for the foreseeable future.

The America Invents Act does little to clear up the controversy surrounding whether a “business method” patent or a software patent is a reasonable thing. There are provisions that may come very close to excluding software dealing with taxes from being patentable, for example.

Congress is debating again.

This time, it’s the current patent law that is coming under legislative scrutiny. Sen. Patrick Leahy (D-VT) says they’ll introduce the legislation next week.

I don’t know yet what I think of this bill. I don’t think I like the idea that damages are limited in patent infringement cases; patent infringement should hit the infringer hard in the wallet. However, I sit on the fence when I see huge awards coming out of tiny infringements. The courts need to exercise a little bit of common sense: tiny infringement should mean tiny award; big infringement should mean big infringement. If juries bring back huge awards for tiny infringements, maybe it’s time for the judge to set aside the award and make an award that is more in line with the size of the infringement.

That’s just my opinion.