Patent Trolls Targeted By New U.S. Law

Companies that abuse the U.S. patents system for their own profits, potentially stifling actual innovation, may disappear.

The House of Representatives Judiciary Committee on Wednesday overwhelmingly supported a bill that adjusts how patent lawsuits will play out. The bill is a small but important step to counter the efforts of patent trolls, or "patent assertion entities," which do not make or produce any product or service but abuse patents by suing inappropriate targets or pursuing frivolous royalty payments.

The bill demands that the winner of a patent lawsuit pay fees. It also requires the claimant, when filing a lawsuit, to set out the exact patents that are allegedly infringed upon and how they are being used. The idea is to discourage abusive lawsuits seeking damages just below the amount that a litigation process would cost--a maneuver that sometimes results with the targeted company paying out-of-court in order to avoid serious expense.

The bill needs to be approved by the full house before it becomes law, but it's joined by a Senate bill that demands patent owners properly disclose ownership when they file a lawsuit and would allow parent companies to step in to defend their customers are accused of violating patents. The latter clause is exemplified by a series of lawsuits in which a patent troll is suing developers of iOS apps for violation, even though Apple asserts its license for the patent covers its developers.

The White House and other political entities in the U.S. are increasingly pushing for patent and legal reforms that protect innovators in the U.S.

[Image: Flickr user Benjamin Chan]

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