New Bill Would Require Patent Trolls To Pay Defendants' Attorneys

Zordak writes "According to Law 360, H.R. 845, the 'Saving High-Tech Innovators from Egregious Legal Disputes' (SHIELD) Act of 2013 would require non-practicing entities that lose in patent litigation to pay the full legal costs of accused infringers. The new bill (PDF) would define a 'non-practicing entity' as a plaintiff that is neither the original inventor or assignee of a patent, and that has not made its own 'substantial investment in exploiting the patent.' The bill is designed to particularly have a chilling effect on 'shotgun' litigation tactics by NPEs, in which they sue numerous defendants on a patent with only a vague case for infringement. Notably, once a party is deemed to be an NPE early in the litigation, they will be required to post a bond to cover the defendants' litigation costs before going forward."

Re:Regulate Bad Patents, Not Independents

[ceoyoyo]

Yes. The Open Invention Network shouldn't be suing people on flimsy grounds either.

Not to mention that the OIN has members like Google. If one of their members is a practicing entity, the OIN can likely make a good argument that they are as well.

Re:Weird sensation...

[Anonymous Coward]

If this law is tailored to the job, not only will you have to be able to afford to go round after round of appeal, but if you lose on any of them, you face instant financial ruin.

If it's actually *your* patent, or if you're actively using the patent to do something other than suing people, then the requirements to post bond and pay the defense costs don't apply.

Re:Regulate Bad Patents, Not Independents

[IP_Troll]

No that sounds completely wrong.

1. The Open Invention Network actively licenses the patents it holds, so it would not be considered an NPE.
2. The SCO litigation was about copyright, not patent.
3. Your statement about unequal protection is false, a non sequitur, and illogical. Big corporations do not "own" the patents it. A shell company in a tax haven like Ireland owns the patents and license them back to the parent, and other licensees. If the Open Invention Network is considered an NPE then so are these shell companies.
4. Attorneys fees to a defendant are already allowed in many types of cases when it is determined that the plaintiff had no business filing suit, including patent litigation. Revising the patent law so that a bond has to be placed before the suit can go forward ensures the wrongfully accused defendant will actually get paid and the plaintiff can't just vanish after they lose, thus leaving the defendant with the attorneys fees.

Your visceral knee jerk reaction to a concept that you do not understand is absurd.

WTF?

[s.petry]

Wow, did you read anything at all or did you see "patent" and just start posting? If you read anything and are posting, you must be a shill. If you didn't read, shame on you. "loser" in this case is limited to a defendant where it's deemed that the company initiating the suit is a troll. The wording in the article states very clearly that if you are deemed a NPE (more on that in a moment) then you must pay a bond to cover the defendant's cost in order to pursue the case.

NPE: You are a widget maker, and competing with 10 other widget makers in the market place. Trollguy buys a patent for a screw that you use in your widget and he sues every one of you dirty widget makers for infringing on his patent for a widget-screw. He does not make widgets, did not invent a widget, and in fact his current business is buying patents and suing people. He would be by definition a NPE. As a NPE, he needs to bond the defendant's legal fees, for every one of those cases of alleged infringement, in order to pursue the cases.

That is a good thing!

In addition: If the infringement claim is dies in court you, Mister Widget, immediately recoup your legal fees by cashing in the bond.

Now if Joe's Widgets sues you for stealing their rounded corner widget design, they are not a NPE. They do not have to bond your legal fees. So the law does not harm normal competition and does not punish inventors. It's at least "some" protection from the current joke that has become patent trolling.

Since I have not fully read the Bill I can not claim that the wording is secure and clear enough to really do anything. Politicians are generally shitheads, and even the best written and intended Bills can get screwed up by their idiocy. That fact is rarely the Bill's fault, but rather the people's fault for voting in shitheads over and over and over again.

Re:Worse for small folks?

[Psyborgue]

That depends. Some lawyers are willing to take defense cases on a contingent fee basis. I was sued once for defamation. Because the case was filed in a state where there were strong anti-SLAPP laws, my, normally 500/hr lawyers took the case for (mostly) free with a relatively small retainer. They were so confident the case was bs, had no chance of winning, and that they could get paid through the anti-SLAPP statute, they were willing to take the small risk of losing. The case ended up costing the plaintiff probably close to half a million by the time the dust settled (the judge even granted them a 1.5x multiplier for their risk). The point is there are lawyers out there who are willing to take these sorts of cases if there are statutes out there that will allow them to get paid. I think this sounds like a good law, even for the small guys.

Re:Weird sensation...

[Antipater]

In that case Joe is the original inventor/assignee and thus exempt from the law.

Re:Weird sensation...

[Dahamma]

Yeah, I don't know where they got the HR 845 from. The bill is real, though:

http://thomas.loc.gov/cgi-bin/bdquery/z?d112:hr6245 [loc.gov]:

Re:Weird sensation...

[viperidaenz]

Company Y doesn't have the money to post bond, so can't continue.