Congress Introduces SHIELD To Protect Against Junk Patent Lawsuits

BY CCIA Staff
February 27, 2013

A House Democrat and Republican have introduced legislation to help protect innovators from patent trolls. The bill, dubbed the SHIELD Act (Saving High-Tech Innovators from Egregious Legal Disputes Act), co-authored by Congressmen Peter DeFazio, D-Ore. and Jason Chaffetz, R-Utah, would allow tech companies to recover litigation costs of lawsuits where the plaintiff’s legal claims had little chance of succeeding.

The legislation, also introduced last August, comes in response to better data on the economic cost of patent trolls. A Boston University Law School study last year found patent litigation by non-producing entities or trolls cost the hardware and software industry $29 billion a year. House Judiciary chairman Bob Goodlatte noted during a hearing last year that patent trolls have also been increasingly using the ITC to harm US tech companies – going from bringing 22 disputes in 2010 to 232 by 2011.

The following can be attributed to CCIA President & CEO Ed Black:

” Legitimate and innocent companies who become targets of trolls face an unpleasant but stark reality.  The cost of defending oneself in court usually far outweighs the cost of settling when confronted by a patent troll.  Victims facing these often baseless lawsuits find it hard to fight back knowing that winning in court often costs more than settling. That is why legislation like the SHIELD Act is needed. Shifting the costs of baseless litigation onto patent trolls who lose in court should help discourage nuisance lawsuits, thus helping give our nation’s real innovators the freedom they need to operate. We thank Congressmen DeFazio and Chaffetz for their leadership on this issue and look forward to working with him to secure passage.

“President Obama is right that the so-called America Invents Act did little to bring real patent reform and address this growing toll on innovation — junk lawsuits. Most tech products often have some connection to thousands of patents, which makes our industry particularly vulnerable to patent trolls.  Furthermore, the rapid pace of innovation and the high-level of entrepreneurial activity give patent trolls lots of vulnerable startup companies to target.

“The SHIELD Act would offer some needed protections for tech companies increasingly hit with baseless lawsuits and would offer some disincentives to those trying for quick lucrative settlements. This won’t instantly fix our dysfunctional patent system, but it will start to chip away at the insanity that is stifling innovation and costing our economy billions.

“This legislation, especially when coupled with the greater recognition within the administration about the economic toll of patent trolls, is an encouraging sign that Congress is building the consensus needed to stop this legal bullying that is thwarting our nation’s long-standing position as a leader in innovation.”

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