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House passes ‘patent troll’ legislation

The U.S. House of Representatives has passed bill called the Innovation Act by an overwhelming majority. The bill, which now heads to the Senate, would force patent holders to detail their products. This would create a significant roadblock for so-called “patent trolls,” firms which acquire patents for the purpose of suing companies for patent infringement.

The Innovation Act would also increase the risk associated with patent lawsuits by allowing defendants to recover their court costs from plaintiffs. If this provision becomes law, the primary cost to defendants of frivolous patent lawsuits will be the time needed to defend the suit, which is not insignificant. Non-practicing entities (patent trolls) tend to target small to medium-sized companies, and offer a quick settlement for less than the cost of going to court. This law would change that cost/benefit analysis for defendants.

The wireless industry has been particularly attractive to non-practicing entities, as industry consolidation has forced some struggling companies to sell their patents separately from their operating units. Some of Nortel’s patents ended up with companies that are not involved in any business related to mobile or wireless.

Small and mid-sized companies are not the only potential targets of non-practicing entities. Recently some holders of patents related to Wi-Fi access points have sued hotels and coffee shops, claiming that they are infringing patents by offering Wi-Fi to their customers. A lawyer for one of those patent holders reportedly said that his client might eventually target anyone with an 802.11 Wi-Fi access point, including home users.

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ABOUT AUTHOR

Martha DeGrasse
Martha DeGrassehttp://www.nbreports.com
Martha DeGrasse is the publisher of Network Builder Reports (nbreports.com). At RCR, Martha authored more than 20 in-depth feature reports and more than 2,400 news articles. She also created the Mobile Minute and the 5 Things to Know Today series. Prior to joining RCR Wireless News, Martha produced business and technology news for CNN and Dow Jones in New York and managed the online editorial group at Hoover’s Online before taking a number of years off to be at home when her children were young. Martha is the board president of Austin's Trinity Center and is a member of the Women's Wireless Leadership Forum.

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