Innovation Act

H.R.9: Innovation Act (2015) (Congress)

The Innovation Act was introduced on February 5, 2015, by Representative Bob Goodlatte (R-VA). The bill was referred to the House Committee on the Judiciary and Subcommittee on the Courts, Intellectual Property, and the Internet, and was placed on the Union Calendar on July 29, 2015. Currently the bill has 27 cosponsors.

Summary

• Heightened pleading requirements: must show how each limitation of each asserted claim in each asserted patent is found within each
• Presumption of attorney fees: encourages judges to make a party pay attorney fees if lawsuit or claim is deemed frivolous
• Transparency of ownership: requires plaintiffs to disclose the owner of the patent in question so the identity of the real parties behind the litigation is clear
  • Will ensure that patent trolls cannot hide behind a web of shell companies to avoid accountability for bringing frivolous litigation
• Discovery limits: limit discovery in litigation until after a claim construction ruling
  • Aimed at reducing cost

GovTrack predicts that the Innovation Act has a 36% chance of being enacted.

The House Innovation Act and Senate Patent Act are very similar; both acts address abusive litigation through “increased transparency, more limited discovery, heightened pleading standards, and ‘loser pays’ fee shifting”. However, there has been a delay in the passing of the bills because of controversy surrounging the shifting of attorney fees. Fee shifting was originally suggested as a way to incentivize small firms and businesses that were being unfairly accused of patent infringement to bring the case to court, so that they would not have to pay their attorney fees. However, there have been arguments stating that fee shifting would actually increase the settlement rate of small businesses being accused of patent infringement, because they don’t want to take the risk of losing and paying for the winner’s attorneys’ fees, in addition to their own. (Bloomberg BNA)