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.”

Patent Protection and Sales Bans: Does the Consumer Lose Out?

A company has the right to protect its innovation through the patent application system and rigorously defend any infringement through patent prosecution, but is there a gray area that jeopardizes a consumer’s right to a competitive market?

 

Take the recent litigation by Apple vs. Samsung  into account, where Apple alleged that Samsung’s Galaxy Note Tablet contains their technology and styling, and you could find an argument for consumer choice. When technological advances create a situation where the consumer market demands a synchronized approach to product usability, is it fair that an ongoing prosecution can effectively remove a brand from the market by stopping sales?

 

In this fast-paced world, is it viable to expect a consumer to spend days relearning a completely different user interface every time they happen to change brands? With the current fines levied on Samsung, there’s no doubt that Apple has had prior cause for complaint to protect its patents, but how will ongoing litigation effect consumer choice if a sales halt is called?

 

What may be the biggest cause for consumer alarm is the idea of a product monopoly, which could create elevated prices in the market. Patent protection and prosecution, with competitive consumer choice in mind, can therefore become a minefield for any company with a consumer-focused public image to maintain.

 

In the technology field, patent prosecution is widespread, so it is essential that patent designs are detailed and all-encompassing to create a clear route to prosecution should an infringement occur. Whether the route for prosecution should also entail a sales ban is something that savvy inventors and businesses need to discuss with their patent attorneys going forward in this consumer-lead market.