Lawmakers are looking to find a way to deter frivolous lawsuits against U.S. tech companies by imposing a monetary cost on plaintiffs who lose patent suits.
Oregon Democratic Rep. Peter DeFazio and Utah Republican Rep. Jason Chaffetz introduced the Saving High-tech Innovators from Egregious Legal Disputes (SHIELD) Act on Wednesday as part of an effort to combat so-called “patent trolls.”
Patent trolls — companies or individuals who purchase patents and file aggressive lawsuits against companies or individuals that make products that use the patents — have a sour reputation in the technology community. Generally, patent trolls are not themselves content producers.
“Patent trolls don’t create new technology, and they don’t create American jobs,” said DeFazio in a statement.
“They pad their pockets by buying patents on products they didn’t create, and then suing the innovators who did the hard work and created the product,” he said.
The bill was first introduced in August 2012, but the new version — which applies to not just software patents, but all patents — also allows for companies filing the lawsuits to prove that they are actually using the patents.
A Boston University study published in 2012 found that patent litigation cost tech companies $29.2 billion in 2011, a sharp increase from $12.6 billion in 2008.
“A single lawsuit, which may easily cost over $1 million if it goes to trial, can spell the end of a tech startup and the jobs that it could have created,” Chaffetz said.
“These egregious lawsuits hurt American innovation and small technology startups, and they cost jobs,” said DeFazio.
A number of technology industry trade association’s applauded the reintroduction of the bill.
“If we want to build American businesses and create jobs, we need to change the law that encourages baseless but disruptive legal threats for American businesses,” Gary Shapiro, president of the Consumer Electronics Association (CEA), said in a statement.