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Bill aimed at 'patent trolls' advances in House

Bill aimed at 'patent trolls' advances in HouseBill aimed at ‘patent trolls’ advances in House

By Andrew Chung

NEW YORK (Reuters) – A congressional panel on Thursday approved a bill aimed at deterring frivolous patent lawsuits, but which some critics say undermines the ability to protect new innovations.

The U.S. House of Representatives Judiciary Committee, in a 24-8 bipartisan vote, sent the measure to the full House, a move reflecting lawmakers’ desire to neutralize so-called “patent trolls,” or companies that make money by aggressively suing over patents instead of selling products.

The bill was supported by a coalition of computer and Internet firms such as Google (NASDAQ:GOOGL), Facebook (NASDAQ:FB), and Cisco Systems (NASDAQ:CSCO). A week ago, the Senate Judiciary Committee advanced its own bipartisan patent reform bill to the floor of the U.S. Senate.

Companies and lobbyists have been urging legislators to pass stricter patent reforms for years. They say changes made in 2011 were not enough to deter abusive litigation and letters from patent owners, who demand payment not only from product manufacturers, but also from end-users such as restaurant owners who offer a technology like Wi-Fi to their customers.

The House bill has been widely considered harsher on patent owners than the Senate’s by requiring losers of infringement lawsuits to pay the winners’ fees unless a judge decides otherwise.

It would also protect customers from lawsuits and could potentially make it harder to file a lawsuit in places considered friendlier to such litigation.

“The patent system was never intended to be a playground for litigation extortion and frivolous claims,” said Judiciary Committee Chairman Bob Goodlatte, Republican of Virginia, who introduced the bill.

While the focus of reforms has been on “trolls,” universities, biotechnology firms and pharmaceutical companies have been wary of any moves that could undermine their patent rights and make it harder for them to sue others to enforce them, such as generic drug makers.

They have complained about trial-like reviews at the U.S. Patent and Trademark Office, created in the 2011 reforms, which have made it easier to challenge the legitimacy of patents, and have led to a high rate of patent cancellation.

The House bill includes a newly-added provision to prevent short sellers from starting this type of review in order to profit from a company’s subsequent fall in share price.

Some trade groups, including the Biotechnology Industry Organization, panned the provision on Thursday as not going far enough to protect patent owners.

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