Innovation Asset Blog

Patent litigation reform reaches Congress floor

The Saving High-tech Innovators from Egregious Legal Disputes (SHIELD) Act was officially introduced in Congress this week. Sponsored by Oregon Representative Peter DeFazio and Utah Representative Jason Chaffetz, the legislation would force plaintiffs to pay defendants' attorneys fees in cases where their patent infringement lawsuits ultimately prove baseless.

According to The Hill, the rationale for the bill stems from the concern that innovation is being discouraged by patent holders that have no plans to create a tangible product yet would sue legitimate companies on the chance monetary damages can be gained from broad infringement claims. The bill contains several provisions that would exempt plaintiffs who could subsequently demonstrate that they have made "substantial investment" in attempts to derive marketable innovations from their patent portfolio.

"Innovative technology companies make huge investments in research, product development and general operations," Robert Holleyman, CEO of software industry group BSA, told reporters. "Too many plaintiffs have no such market risks. Their only operating cost is litigating, which imposes disproportional burdens on their targets."

The bill was initially presented in August 2012, but according to CNET, the political winds may be more conducive to passage this term. As legislators trumpet their support for small business growth, SHIELD Act approval could serve as a significant opportunity to make good on their claims.

Peter Ackerman

Peter Ackerman

Founder & CEO, Innovation Asset Group, Inc.