Generally, patent trolls, also known as “non-practicing entities,” are entities that file and own patents without practicing the patented invention. Those entities then lie in wait until they have the opportunity to threaten lawsuits against businesses and entrepreneurs, demanding licensing fees for their patents’ use. For instance, some retailers who provide customers with free Wi-Fi internet have recently been threatened with lawsuits because an entity has alleged that such service violates their patent.

Bill To Combat Frivolous Litigation by Patent Trolls

The U.S. House of Representatives reintroduced a bill on February 5, 2014, that would combat this widely derided practice by providing a barrier to filing in three primary ways. First, the bill gives judges discretion to award legal fees to the prevailing party if the losing party’s lawsuit is deemed frivolous. Second, the bill would require plaintiffs who allege patent infringement to detail the defendants’ infringement with greater specificity. Finally, litigation against end-users of the alleged infringer’s product would be delayed until litigation against the manufacturer of the product concluded.

Patent Trolls Seen As Stifling Innovation

Last year, a nearly identical bill passed with overwhelming support in the House of Representatives, but it failed once it reached the Senate. Some legislators were concerned that the measures might provide legitimate infringers with too much protection. However, with one political party controlling both the House and the Senate and with the White House’s support, the bill is much more likely to pass this time. Given the prevalence of patent trolling and its effects on innovation, members of both political parties see this legislation as a necessity.

Patent trolls can inflict a great deal of damage when companies heavily integrate technology and when the troll seeks a sizeable settlement in return for its use. One 2014 study found that patent trolls now account for 67 percent of all patent lawsuits.

Source: http://www.reuters.com/article/2015/02/05/congress-patents-usa-idUSL1N0VF23620150205 http://www.usatoday.com/story/money/business/2014/07/08/patent-troll-legislation-fight/12392453/ http://www.washingtonpost.com/blogs/the-switch/wp/2014/07/15/patent-trolls-now-account-for-67-percent-of-all-new-patent-lawsuits/ http://thehill.com/policy/technology/231873-house-members-renew-patent-troll-bill

For more information on this topic, please visit our Patent Litigation service page.

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