PublishedAugust 2, 2012

Congress Offers SHIELD Against Junk Patent Lawsuits

Two members of Congress have introduced legislation to help innovators combat patent trolls. The bill, dubbed the SHIELD Act (Saving High-Tech Innovators from Egregious Legal Disputes Act) or HR 6245, co-authored by Congressmen Peter DeFazio, D-Ore., and Jason Chaffetz, R-Utah, would allow tech companies to recover litigation costs for nuisance lawsuits where the plaintiff made legal claims that had little chance of succeeding.

The legislation comes just after a Boston University Law School study found patent litigation by non-producing companies known as trolls cost the hardware and software industry $29 billion a year. At a recent hearing House IP subcommittee chairman Bob Goodlatte pointed out that patent trolls have also been increasingly using the ITC to harm US tech companies, bringing 22 disputes in 2010 and 232 by 2011.

The following can be attributed to CCIA President & CEO Ed Black:

“The patent reform bill last year unfortunately did not address this growing toll on innovation — junk lawsuits. Because tech products are interoperable with hundreds of components, the industry is particularly vulnerable to phony companies that don’t produce anything and exist mainly to sue other companies.

“The SHIELD Act would offer some disincentives to those attacking tech companies with nuisance lawsuits and counting on quick lucrative settlements. While this is not going to solve all the problems with our dysfunctional patent system, it is a step toward sanity and a step that will help staunch this drain on our economy.

“The introduction of this legislation along with the recent House hearing on patent trolls are encouraging signs that Congress is paying attention to this drain on innovation and our economy and are ready to intervene.”

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