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.