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A Bill

Stopping Patent Trolls


H.R. 3309 Innovation Act

The Essentials:
1. Everyone from Silicon Valley giants to small-time shop owners has tired of so-called patent trolls, companies whose main way of making money is to sue—or threaten to sue—those who allegedly infringe their patents. The most aggressive send letters to thousands of businesses demanding cash to avoid litigation. In a rare show of unity, the House on Dec. 5 overwhelmingly passed the Innovation Act, aimed at discouraging such patent abuse.
 
2. Since patent cases can be very expensive to defend, a lot of companies simply settle when they receive letters from trolls, aka “patent assertion entities.” The bill intends to make those who threaten lawsuits think twice by requiring some losers to pay the winner’s legal fees. It also makes it harder for patent owners to hide their identities by requiring those with a stake in a suit to be named. And it demands that plaintiffs justify their claims by detailing how a patent was infringed.
 
3. The bill now moves to the Senate, which has been kicking around similar versions, led by Vermont Democrat Patrick Leahy. New York Democrat Charles Schumer is pushing for stronger reforms not found in the House bill—including a controversial provision that would make it easier to challenge the validity of some patents. That could be a tough sell: Some tech companies, including Microsoft (MSFT), strongly oppose it.

Brustein is a writer for Businessweek.com in New York.

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