Will the 2012 SHIELD Act STOP the Patent Trolls?

Patent trolls, technically referred to as non-practicing entities (NPEs), are people who file outrageous patent lawsuits that often threaten the viability of the firms they attack.  Patent trolls are major thorns for America’s small tech companies, and combined to cost some of those companies over $29 Billion dollars in 2011 alone.

One Oregon Democrat, Representative Peter DeFazio decided to bring this costly and underhanded matter to the attention of Congress. In late July, DeFazio and Representative Jason Chaffetz (R-Utah) introduced legislation into the U.S. House of Representatives called the Saving High-tech Innovators from Egregious Legal Disputes (SHIELD) Act [PDF].

The bill is designed to discourage NPEs from filing frivolous lawsuits by requiring the Patent Troll to pay the defendants’ legal costs if their suit is unsuccessful.  The key language of the bill seeks “To amend chapter 29 of title 35, United States Code, to provide for the recovery of computer hardware and software patent litigation costs in cases where the court finds the claimant did not have a reasonable likelihood of succeeding, and for other purposes.

Why is this helpful?  Julie Samuels, an attorney who focuses on intellectual property issues at the nonprofit Electronic Frontier Foundation explained that, “Patent litigation has been called ‘the sport of kings’ because of the high cost.  It can cost tens of millions of dollars to defend a suit…while big companies might be able to afford the fees, smaller companies can’t and are left having to pay up and settle.”

Hopefully the 2012 SHIELD Act will turn the thorn on Patent Trolls for good. Rep. Chaffetz said, “The SHIELD Act ensures that American tech companies can continue to create jobs rather than waste resources on fending off frivolous lawsuits.”

Five Reasons Why To Patent Your Invention

Inventors are commonly encouraged to patent their inventions, but the patent process can take time and resources to execute properly.  Some inventors decide that the cost is not worth the effort, and forgo the process, without realizing the significant benefits that patenting their invention can provide.

 

According to the USPTO, The right conferred by the patent grant is, in the language of the statute and of the grant itself, ‘the right to exclude others from making, using, offering for sale, or selling’ the invention in the United States or ‘importing’ the invention into the United States.

 

Here are five reasons why it is important to patent your intellectual property:

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  1. To Protect Against Intellectual Property Theft – One of the main reasons to patent your invention is that it is very difficult to convert an idea to market without interacting with parties outside of your company.  You’ll have to share concepts with investors and manufacturing partners in order to commercialize your concepts.  By filing for a provisional patent on your design, you gain legal protection against the unauthorized use of your concept.
  2. To Protect Your Company’s Ability to do Business – To put it simply, if you don’t patent it, someone else will, eventually.  You could not only have competition in your market, but you could also lose the rights to compete at all.  If this happens, then all of the investment that you put into your business could be for naught and you could become entangled in costly legal battles.
  3. To Increase Market Position – By developing a patent portfolio for your company’s intellectual property, you will increase your market position by limiting the ability of other companies to compete in your specific niche.  This increased market position and reduced competition can result in an increase in return on investment (ROI) for your company.
  4. To Guarantee Your Ability to Charge Licensing Fees– You may never get to the point where you fully commercialize your concept, but there may be others that have the resources to make your ideas come to life.  This is where licensing can be a great benefit.  By patenting your design, you can license the patent to a partner company, who then invests in the commercialization.  Your company then earns licensing fees for the use of the technology.  Without patents, it would be legally difficult to transfer technology to a development partner.
  5. Patents Look Good on Paper – A patent portfolio is tangible evidence of the technical expertise and commitment to development that you have instilled in your company.  Investors and partners will perceive an increased level of expertise, quality, and innovation in your company, which could lead to increased investment.  Investors and partners will feel a sense of security knowing that you have protected your IP, which will in turn protect their investment.

 

Patenting a product design can take time and resources to complete, but the benefits that patent protection can provide to your company can far outweigh the investment required.