Patent Troll Reform?

The Electronic Frontier Foundation has published the text of the awkwardly named Saving High–Tech Innovators from Egregious Legal Disputes Act of 2012 a/k/a the SHIELD Act, introduced earlier this week by Reps. DeFazio (D–Oregon) and Chaffetz (R–Utah). The bill would add a new provision to the patent laws covering the recovery of litigation costs for suits filed under computer hardware and software patents. In patent cases, the usual rule regarding attorneys’ fees is that they are available to a prevailing party only in an “exceptional” case, a very high bar to clear. Under the proposed statute, the accused infringer could be entitled to “the recovery of full costs to the prevailing party, including reasonable attorney’s fees” if “the party alleging the infringement of the patent did not have a reasonable likelihood of succeeding.”

Two elements of this proposal stand out on first read. First, the bill calls out computer hardware and software patents for differential treatment, suggesting a willingness by at least these members of Congress to view different kinds of technology as warranting different kinds of patent protection. Second, the focus on the fees strongly suggests that patent trolls are targets of the legislation as the high cost of patent litigation can be the key factor leading to settlement in suits by non–practicing entities that peg their settlement demands to the costs of defense. This fee–shifting proposal would increase the likelihood of a fee award to defendants in software or hardware patent cases, presumably giving some plaintiffs some pause before filing suit. The proposed SHIELD Act will be worth watching.

Posted by David Swetnam-Burland