Washington, D.C. – House Judiciary Committee Chairman Bob Goodlatte (R-Va.) today was joined by Representative Peter DeFazio (D-Ore.), Subcommittee on Courts, Intellectual Property, and the Internet Chairman Darrell Issa (R-Calif.), Subcommittee on Courts, Intellectual Property, and the Internet Ranking Member Jerrold Nadler (D-N.Y.), Science, Space and Technology Committee Chairman Lamar Smith (R-Texas), Representative Zoe Logren (D-Calif.), and Energy and Commerce Subcommittee on Communications and Technology Ranking Member Anna Eshoo (D-Calif.) in introducing a bill to address the ever increasing problem of abusive patent litigation.  The bipartisan Innovation Act (H.R. 9), which is the same legislation that passed the House in 2013, builds on the reforms that were made in the America Invents Act and addresses certain abusive practices taking place in our courts.

Chairman Goodlatte, Representative DeFazio, Subcommittee Chairman Issa, Ranking Member Nadler, Representative Lofgren, and Representative Eshoo released the statements below on the bill’s introduction.

Chairman Goodlatte: “In recent years, we have seen an exponential increase in the use of weak or poorly granted patents by patent trolls to file numerous patent infringement lawsuits against American businesses with the hope of securing a quick payday.  American businesses small and large are being forced to spend valuable resources on litigation rather than on innovating and growing their businesses.

“With our current patent laws being abused in ways that are threatening the survival of American innovation, the Congress must act to curb abusive patent litigation.  The bipartisan Innovation Act contains commonsense reforms and makes the patent litigation process more transparent.  This same legislation passed the House by an overwhelming margin last Congress. I look forward to working with the Senate Judiciary Committee to see this legislation sent to the President to be signed into law.

Representative DeFazio: “Patent trolls don’t contribute to the American economy. They don’t build things, provide services or keep our country moving – rather, they prey on our small businesses and innovators by manipulating patent laws and extorting billions of dollars each year from them. I saw this first-hand in my district when a business owner was forced to delay a product launch and put off hiring while they dealt with a frivolous lawsuit brought on by a patent troll. This is happening in communities all over the country. It’s time for Congress to drive these bottom-feeding patent trolls to extinction.”

Subcommittee Chairman Issa: “Thomas Jefferson wrote that it is ‘part of the American character’ to ‘invent and execute; to find means within ourselves, and not to lean on others.

“But increasingly, Americans find innovation obstructed, with attempts to enter the marketplace frequently shutdown by well-funded patent trolls who exploit loopholes in our patent system, bullying inventors and small businesses with frivolous lawsuits to the tune of $29 billion each year. I am thankful to Chairman Goodlatte for his leadership on legislation that aims to restore the American patent system to its original purpose: catalyzing, rather than curbing, a new generation of great American ideas.”

Subcommittee Ranking Member Nadler: “Patent trolls stifle innovation, damage our economy, and injure legitimate businesses.  I supported this legislation last year and I’m a cosponsor today because I think it strikes a reasonable balance in addressing the patent troll problem without imposing too great a burden on plaintiffs.  However, no legislation is perfect and I have long-standing concerns about ‘loser pays’ provisions and certain other litigation reforms in the bill.  I’ve had good conversations with Chairman Goodlatte and he’s told me he expects this to be an open and bipartisan process.  I look forward to working with him, Chairman Issa, and the other sponsors on improvements to the bill that will address the problem of patent trolls while ensuring legitimate inventors are protected.”

Representative Smith: “Patent trolls abuse the system, stifle innovation, drain precious research and development capital, and stunt economic growth. These bad actors are engaging in legalized extortion. That’s why we must act to make these harmful and irresponsible actions illegal. TheInnovation Act restores accountability and sanity to our patent system while preserving legitimate patent infringement claims.”

Representative Lofgren: “I believe the Innovation Act has potential to reform the patent system in a way that truly promotes invention and competition. I look forward to working with Chairman Goodlatte and my colleagues on the Judiciary Committee in an open process to refine this bill in a way that will best halt abusive practices and protect independent inventors with legitimate patent claims. America’s innovation economy – and the American public, in turn – will benefit from an earnest effort to curb abusive patent litigation.”

Representative Eshoo: “When our patent system is not working in a wholesome and robust way, competition, innovation, and consumerism are threatened. When businesses aren’t bogged down with abusive patent litigation, they spend on average $211 million more on research and development than firms that have to redirect resources to protect their original ideas in court. The Innovation Act is the solution to the problem of abusive patent litigation, and I’m proud to have introduced this bipartisan bill with Chairman Goodlatte and other Members of Congress.”

Background on the Innovation Act

·         Requires plaintiffs to disclose who the owner of a patent is before litigation, so that it is clear who the real parties behind the litigation are. This will ensure that patent trolls cannot hide behind a web of shell companies to avoid accountability for bringing frivolous litigation.

·         Requires plaintiffs to actually explain why they are suing a company in their court pleadings.

·         Requires courts to make decisions about whether a patent is valid or invalid early in the litigation process so that patent trolls cannot drag patent cases on for years based on invalid claims.  This prevents invalid patents from being used to extort money from retailers and end users.

·         When parties bring lawsuits or claims that have no reasonable basis in law and fact, the Innovation Act requires judges to award attorneys’ fees to the victims of the frivolous lawsuit.  The bill allows judges to waive the award of attorneys’ fees in special circumstances.  This provision applies to both plaintiffs and defendants who file frivolous claims.

·         Requires the Judicial Conference to make rules to reduce the costs of discovery in patent litigation, so that patent trolls cannot use the high costs of discovery to extort money from small businesses and entrepreneurs.

·         Creates a voluntary process for small businesses to postpone expensive patent lawsuits while their larger sellers complete similar patent lawsuits against the same plaintiffs, to protect customers who simply bought the product off-the-shelf.

·         Requires PTO to provide educational resources for those facing abusive patent litigation claims.

The Innovation Act previously passed the House of Representatives in the 113th Congress by an overwhelming bipartisan vote of 325-91.  That legislation was supported by a wide range of groups that include stakeholders from all areas of our economy representing businesses of all kinds from every corner of our country including independent inventors and innovators.