HR2639: Patent Litigation and Innovation Act (“PLIA”) of 2013 is being hailed as the legislation to attack the abusive tactics of the patent trolls or more cordially known as Non-practicing entities. However, the requirements of the new legislation seem to throw the baby out with the bath water.
The Patent Litigation and Innovation Act is directed to the pleading requirements when filing a complaint with a court. The Act would require the complainant or the patentee to provide information up front such as a claim chart which breaks down the patent claims per limitation being asserted and the corresponding structure in the accused device that meets that limitation. The patentee would also have to list each of the allegedly infringing devices. These requirements are oftentimes difficult to determine before litigation because the information might only be available to the alleged infringer. The patentee may have crucial information but not all of the evidence to prove up infringement. For example, if the patent claim is directed to special process that produces a compound then the patentee couldn’t find out the particular steps being taken by the alleged infringer to make the compound except through discovery. What the proposed Act is doing is making it harder for hard working companies and inventors to enforce their patent rights. The proposed Act applies a set of rules to all patentees and not just patent trolls. Hence, the proposed Act is throwing the baby out with the bath water.
One requirement in the proposed Act is peripherally related to patent trolls. In particular, the complaint must describe the business of the patentee. It does not dismiss the complaint if the patentee is not making the product. Bottom line, this requirement does nothing to stop patent trolls from pursuing a lawsuit. Rather, by increasing the requirements for filing a complaint as discussed above, the proposed legislation makes it more difficult for everyone including hardworking inventors, start-ups and companies to assert their patents.
The danger of attacking patent trolls is that the term “patent trolls” applies to many patentees that are not considered to be bad actors. The classic definition of a patent troll is a company that does not make a product but only pursues royalties from others by enforcing the patent. This broad of a definition would include research universities. Many start-ups leave open the option of licensing their ideas to another company. Would these entities be considered a patent troll? No.
Additionally, companies that have at least a few patents may also be considered a patent troll. Google has at least some patents in its portfolio that it purchased which it isn’t implementing. The same may be true for IBM, Microsoft, Apple. These companies will have at least one claim that does not cover their product or business model. If they were to receive royalties from a third party because these types of claims, would they now be considered a patent troll?
The problem with the proposed Act is that it does more harm than good.
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