H.R.845 — Saving High-Tech Innovators from Egregious Legal Disputes Act of 2013 (Introduced in House – IH)

By Dennis Crouch

The text of the proposed SHIELD ACT legislation adds one new section, 35 U.S.C. § 285A as follows:

= = = = =

Sec. 285A. Recovery of litigation costs

(a) In General- In an action involving the validity or infringement of a patent–

(1) a party asserting invalidity or noninfringement may move for judgment that the adverse party does not meet at least one of the conditions described in subsection (d);

(2) not later than 90 days after a party has moved for the judgment described in paragraph (1), the adverse party shall be provided an opportunity to prove such party meets at least one of the conditions described in subsection (d);

(3) as soon as practicable after the adverse party has been provided an opportunity to respond under paragraph (2), but not later than 120 days after a party has moved for the judgment described in paragraph (1), the court shall make a determination whether the adverse party meets at least one of the conditions described in subsection (d); and

(4) notwithstanding section 285, the Court shall award the recovery of full costs to any prevailing party asserting invalidity or noninfringement, including reasonable attorney’s fees, other than the United States, upon the entry of a final judgment if the court determines that the adverse party did not meet at least one of the conditions described in subsection (d), unless the court finds that exceptional circumstances make an award unjust.

(b) Bond Required- Any party that fails to meet a condition under subsection (a)(3) shall be required to post a bond in an amount determined by the court to cover the recovery of full costs described in subsection (a)(4).

(c) Timing and Effect of Pending Motion- With respect to any motion made pursuant to subsection (a)(1) the following applies:

(1) In the case of a motion that is filed before the moving party’s initial disclosure are due–

(A) the court shall limit any discovery to discovery that is necessary for the disposition of the motion; and

(B) the court may delay issuing any scheduling order until after ruling on the motion.

(2) In the case of a motion that is filed after the moving party’s initial disclosures are due the court may delay ruling on the motion until after the entry of final judgment.

(3) In the case of a motion that is filed after the entry of final judgment, any such motion must be combined with a motion for fees to the prevailing party.

(d) Condition Defined- For purposes of this section, a `condition’ means, with respect to the party alleging infringement, any of the following:

(1) ORIGINAL INVENTOR- Such party is the inventor, a joint inventor, or in the case of a patent filed by and awarded to an assignee of the original inventor or joint inventor, the original assignee of the patent.

(2) EXPLOITATION OF THE PATENT- Such party can provide documentation to the court of substantial investment made by such party in the exploitation of the patent through production or sale of an item covered by the patent.

(3) UNIVERSITY OR TECHNOLOGY TRANSFER ORGANIZATION- Such party is–

(A) an institution of higher education (as that term is defined in section 101 of the Higher Education Act of 1965 (20 U.S.C. 1001); or

(B) a technology transfer organization whose primary purpose is to facilitate the commercialization of technology developed by one or more institutions of higher education.

80 thoughts on “H.R.845 — Saving High-Tech Innovators from Egregious Legal Disputes Act of 2013 (Introduced in House – IH)

  1. With this big money only court system this legislation is building expect to see nothing new in the line of inventions in the future there shutting it down

  2. I agree. How is this constitutional? Imposing greater burdens on some in seeking judicial remedies? It will be interesting to watch this play out.

  3. Query, because I honestly do not know, how does the SC leverage the 14th Amendment’s EP clause to cover Federal statutes?

    With a little fancy footwork. They essentially read it into the “due process” of the 5th Amendment.

  4. LB, thanks for the link. It does appear that equal protection might be better. See below, a quote from MLB that discusses the equal protection angle.

    Query, because I honestly do not know, how does the SC leverage the 14th Amendment's EP clause to cover Federal statutes?

    "in Lindsey v. Normet, 405 U.S. 56 (1972), the Court confronted a double bond requirement imposed by Oregon law only on tenants seeking to appeal adverse decisions in eviction actions. We referred first to precedent recognizing that, "if a full and fair trial on the merits is provided, the Due Process Clause of the Fourteenth Amendment does not require a State to provide appellate review." Id., at 77. We next stated, however, that "[w]hen an appeal is afforded, . . . it cannot be granted to some litigants and capriciously or arbitrarily denied to others without violating the Equal Protection Clause." Ibid. Oregon's double bond requirement failed equal protection measurement, we concluded, because it raised a substantial barrier to appeal for a particular class of litigants–tenants facing eviction–a barrier "faced by no other civil litigant in Oregon." Id., at 79. The Court pointed out in Lindsey that the classification there at issue disadvantaged nonindigent as well as indigent appellants, ibid."

  5. Yes, WCT and IPman have described a truck-sized loophole: each patent wed to a single business entity.

    This is a whole new level of ‘abstraction’ given that the AIA allows business entities to now file patent applications in their own names, and is very soft on actual inventors being involved (Oath/Declaration changes).

    All we have done is introduce more (rather than less) shell games and subterfuge into the patent world.

    I am beginning to like this anti-“troll” bill… (another plank in the perpetual patent attorney employment scheme). Will the Office make it easy by providing links to various state incorporation papers?

  6. Thanks guys – I see your point, the initial LLC stays both alive and in control and it is the market that transforms from ‘patents’ as alienable property to ‘patent and accompanying shell game crafted to defeat this legislation’ as alienable property.

    Nice job.

    More work for the transactional guys – business entity establishment and mergers and acquisitions – in order to build the structure of an entity around each patent.

    What do you envision for patent families? Still single LLC’s for each patent in the family – just in case?

  7. You’ve hit upon the big problem with this law. The first question anybody should be asking is how is this going to change behavior. Because of the need to exempt certain entities (otherwise this law because politically untenable) it opens up loopholes for the NPEs to exploit.

    With a loophole to exploit, anybody that cannot argue that they don’t meet one of the conditions described in subsection (d) needs to hire a savvier attorney. When the law only traps unsophisticated parties while the sophisticated parties (i.e., the NPEs) can get around the law, then what is the legitimate purpose of the law?

    As an aside, I cannot wait to see what is meant by “substantial investment.” That is pretty ambiguous.

  8. To your response at 4:57 –

    The LLC is not a troll while it is trying to develop and commercialise the invention, as the original assignee of the inventor. It only becomes a troll later, if it is bought by the larger troll.

    During the litigation, the LLC remains the party in interest and is the plaintiff. As the original assignee, it doesn’t have to post a bond.

    So although West Coast referred to “sold to whoever wants to enforce the patent”, it will actually be the LLC that does the enforcing. As parent, the larger troll will benefit from any success, e.g. by way of an income distribution.

    If the legal action goes pear-shaped, the larger parent troll loses its initial investment, and perhaps the LLC’s own attorney’s fees if not contingency-funded. That’s just the same risk it would have had anyway. But otherwise there is no recourse to the parent troll’s other assets. The parent is shielded from the SHIELD Act.

  9. Apotu,

    You just don’t get it, do you? You have SO drunk the non-practicing k_ool-@id that you don’t unerstand that “practicing” is nowhere a part of the US patent right.

    You have skipped completely over what the US patent right means.

  10. Thanks – pretty much status quo (except for the weeding out as discussed below).

    At some point then, it would make sense for the “Trolls” to become “Troll University” and not even have to put up any bonds at all.

    LOL – can you imagine the micro-entity fee payments and the defeat of Prior User Rights plus the market manipulation (depressed prices for IP and no real buyers) by “Troll University”?

    The adage of “be careful of what you wish for” comes to mind. That, and “unintended consequences.”

  11. Competely agree. The big trolls (e.g. IV) would get even bigger because they would have $10M+ to risk. They would also be buying their patents at a much lower cost because the buyers in the market would be greatly reduced.

    I guess it is possible that the big trolls may not get bigger because the bill would reduce the number of patents they assert, but there would be no such thing as a small-time troll! (unless they met one of the conditions).

  12. The LLC would be a wholly owned subsidiary of a parent company. The LLC wouldn’t have any money -only enough to fund enforcement/litigation. Then you are back to a “house money” scenario where the parent wins big or simply lets the LLC fold.

  13. Really? The only one of those conditions that isn’t incredibly simple to prove is the “substantial investment” one, and how hard is it to print out the manufacturing or sales records for the plaintiff’s patented product?

    The only ones who will incur substantial costs are those entities trying to fit their non-practicing shenanigans into a substantial-investment-shaped hole.

  14. because it would essentially be unenforceable for anyone who didn’t have $10M handy to risk putting up a bond

    I think I am following your drift – in essence, this bill then only creates mega-trolls – as alienation of property will still continue and the large established trolls would be the likely buyers of the patents on the (free) market, right?

    You still need to deal with my response at 4:57.

  15. Perhaps you should review the thread… you are mistaken again

    You are projecting again.

    I even provided a definition of cronyism to help you out.

    I’m sorry that you’re having such difficulty following this.

    You are still projecting. I am following fine and merely pointing out that you are off the track (again).

    It was obviously your “reassuring” frolic that I was posting my comment in reply to. You know, the part where you stopped talking about what the other person actually said (and the very part you shot your arrow at).

    And instead of actually picking up my point about law being passed on the merits rather than through monied interests, you decided to put another arrow to your bow.

    Do you even realize anymore when you shoot those arrows into the ground at your feet?

  16. @IPman, yes, that is what I mean – you probably articulate it better.

    @anon “Trolls” don’t have to be part of the prosecution process at all. IBM (and other large companies) would make a new LLC as standard practice for each patent as a way to maximize their income possibilities.

    If they don’t want to utilize a particular patent in a product because it doesn’t fit their business model, they would just sell 100% of the LLC to the highest bidder. If IBM sold the same patent without the LLC, I’m guessing the patent would fetch only 25% of the same patent being sold via LLC, because it would essentially be unenforceable for anyone who didn’t have $10M handy to risk putting up a bond.

  17. Notwithstanding the item 2) fallacy (which was a critical omission in your reply), I gather that you are presupposing now that the original LLC is remaining intact, but is now a part of the larger entity, is that correct?

    Two rebuttals to this:
    1) The post stated “sold to whoever wants to enforce the patent” – since enforcement is only done by the party in interest, the use of the word sold indicates a transfer of that interest and it was that transfer which was what I was addressing. Further, the comment states “the troll to qualify” which indicates that a transfer to a different entity was envisioned, not a retainer with the first entity and that entity’s parent corp only changing.

    2) Even if you are merely changing (creating) a money-bags parent corp (your “larger troll”), this still fails for the obvious reason that such a larger entity would have assets worth attaching, and that violates the principal for setting up the small LLC in the first place. That “100% ownership” thing is a no-go.

    You trip right out of the starting gate, and then shoot yourself in both of your feet. I don’t see how you are going to finish the race.

  18. “suspect classification in the Equal Protection sense is not one of them” – Are you sure? Perhaps you just had your eyes closed (you do that more than you think, and you think less than you should prior to shooting your arrows).

    Yes, I’m pretty sure. And where do you detect “arrows,” anon? You said that Professor Risch noted a suspect classification, and I disagreed. Could you please point out where he does so?

    Oh, I see – so you were not actually talking about what the other person was talking about (what they actually said), and you want me to play by some other rules that you don’t play by…

    I’m afraid you are mistaken again, anon. Perhaps you should review the thread. Les expressed concern that the legislation was motivated by cronyism. I agreed with him to the extent that it is probably motivated by moneyed interests. So you see, while not agreeing precisely, we were both discussing the motivations behind the legislation. I then reassured Les that there was no need for him to worry – the moneyed interests on the other side would likely prevent the legislation from passing.

    I’m sorry that you’re having such difficulty following this.

    But that’s just me being me.

    Clearly.

  19. AS I understood West Coast’s proposition, the new LLC will start out as simply the vehicle which attempts to develop and commercialise the invention in the normal way. No-one would have any problem with that.

    But if that fails, the LLC can be sold 100% to whoever wants to enforce the patent. The “condition defined” would be preserved because the LLC itself would be the plaintiff in any legal action. It would become a troll, owned 100% by a larger troll.

  20. IPman-

    I assume you mean under TRIPS Article 3 Section 1, the “National Treatment” clause.

    It is interesting that it covers the “protection” of IP, but that “protection”, according to the TRIPS footnote, includes “…matters affecting the availability, acquisition, scope, maintenance and enforcement of intellectual property rights…”

  21. Notice also that it repeats the AIA in providing a carve-out only for US universities, not foreign universities.

    Of course, probably no-one in the US will care about this until foreign countries complain that it violates the USA’s obligations under TRIPs, and seek sanctions against US owners of foreign patents.

    Naturally, if China amended its patent law to favour Chinese universities over US universities, the situation would be entirely different.

  22. The classification is suspect (as Prof. Risch notes – and you applaud),

    Suspect classification is a term of art, anon. My comment was directed to lawyers, who should be familiar with it. My apologies for that.

    Professor Risch clearly expresses several good reasons why the proposed legislation is ill-conceived. But suspect classification in the Equal Protection sense is not one of them.

    “moneyed interests on the other side” – Not sure what point you are trying to make with this observation. This has nothing to do with the “worth” (or lack thereof) of this proposed law.

    There you go disregarding important parts of my comments, again. My comment about “moneyed interests” had nothing to do with the “‘worth’ (or lack thereof) of this proposed law.” Instead, I commented on the likelihood of its passage, as follows: “I don’t think this legislation is likely to go too far – there are moneyed interests on the other side as well.” Do you have any comment regarding what I actually said?

  23. Any flaws to my logic?

    Yes. At least two.

    1) “will simply be sold to whoever

    It is not certain that a sale of property preserves the “condition defined.”

    In fact, that’s probably NOT included.

    2) As previously mentioned, you are also operating under the Peter Zura disposed-of fallacy that “Trolls” are active during the prosecution stage.

    But I do have a nice project for you: Find one single modern advanced country that has seen the light and deep-sixed all of their IP laws. It’s a race – as I have asked this of several posters.

  24. The classification is suspect (as Prof. Risch notes – and you applaud), and goes against the larger notion of alienability of property.

    moneyed interests on the other side

    Not sure what point you are trying to make with this observation. This has nothing to do with the “worth” (or lack thereof) of this proposed law.

    Cronyism: The appointment of friends and associates to positions of authority, without proper regard to their qualifications.

    I imagine that Les is politely referring to the sponsorship of this bill as “friends and associates” of Peter DeFazio and Jason Chaffetz to whom the two have seemingly lent their authority to draft law; as clearly the qualifications of those drafting this drek are absent.

  25. My takeaway from this proposed bill is that every new patent filed will be assigned to a new LLC (the original assignee) which will add $500 of additional costs to filing a patent. Then, 100% of the LLC will simply be sold to whoever wants to enforce the patent, which allows the troll to qualify as an “original inventor.”

    Any flaws in my logic?

  26. That’s pretty cool

    The parts of your argument that fall apart, you mean?

    I don’t think you should get that excited.

  27. but that is hardly a key portion

    That’s pretty cool how you can pick and choose which parts of my argument can be disregarded.

    You are trying very very hard to hold a very very tenuous position.

    Much too hard, obviously. I’ll stop now.

  28. “filed by and awarded to” is a single conjunctive sentence – both parts are required.

    Your other questions are good questions.

  29. I know what you are thinking of – but that is hardly a key portion, as I did include the notion that the patent right is a federal patent right (and thus created by the state).

    You are trying very very hard to hold a very very tenuous position.

  30. Apparently they have the right to demand a million plus bond from you under threat of force, if this law passes anyway.

  31. Or if you’re a legit company with only a couple hundred K on hand, you should just shut your doors and assign your rights to the big guy down the street before he legally steals 2mil from you for mentioning that you own a patent.

    Man, I wish the United States was still around. It was such a nice place to live and do business.

  32. No.

    You left out a key portion of the phrase that you quoted. The state-created relationships I’m thinking of are marriages, legal guardianships.

  33. That depends on how the language is interpreted. The bill refers to “a patent filed by and awarded to an assignee of the original inventor or joint inventor.” Does that only apply if the assignee is the Applicant? Or does it mean if the assignee is the one who causes the application to be filed? And this would also seem to exlude instances where the “original assignee” assigns the patent to an offshor holding company.

    And speaking of IP holding companies, the part about exploitation of the patent would also seem, potentially, not to apply to holding companies, as it states that the plaintiff (“Such party”) “must provide documentation to the court of substantial investment made by SUCH PARTY in the exploitation of the patent through production or sale of an item covered by the patent.” Does substantial investment by a licensee count?

    Also, how substantial of an investment is substantial???

  34. or if the court is the sole forum for resolving

    The enforcement of a federal patent right is only done through the court system.

    Does that make it fundamental enough?

  35. As I understand it, this Shield Act does not propose a loser pays models, it proposes a certain assignees –that we don’t like– pays if they loose model.

  36. Forcing plaintiffs to prove they are not “trolls” will add time and substantial costs to any action. For cash-pressed SMEs and start-ups seeking to defend their rights against deep pocket defendants this could be extremely problematic. Expect claiming that the plaintiff is a “troll” as defined by SHIELD to become a standard defence play if the legislation is passed.

  37. Regardless, access to the courts is a fundamental right that cannot be unreasonably burdened.

    I think that’s too broad a formulation, Ned. Access to the courts is a fundamental right if the right at issue is a fundamental right, or if the court is the sole forum for resolving/dissolving state-created relationships, e.g., marriage.

    Furthermore, while I think this particular bill is unwise, I don’t think it’s particularly unfair, at least as between a patentee and a defendant. The current situation is that a patentee can inflict significant costs on the defendant, even in a case that’s clearly a loser, provided only that the case is not entirely “frivolous.” In a situation where you only have to win on the preponderance of evidence, the loser-pays model is much fairer, in my opinion.

  38. both annoying and troublesome meddling in the market.

    From whose pespective?

    Your posts sound in “Sport of Kings,” and the “little guys keep out.”

  39. Ned,

    Thanks.

    I now read the shield as being broader than I originally thought, and with the option of any of the shield elements, the Big Corp can continue their Patent Nuclear Option and their building of patent thickets against the world, while stripping away the actual benefit from “Trolls” of such thicket busting.

  40. while considerably harming the ability of many patentees to defend their rights

    In what way?

  41. “Saving High-Tech Innovators from Egregious Legal Disputes Act of 2013″

    Seems to me if you’re a “High-Tech Innovator”, you should not have the problem of infringing on someone else’s patent, because you would have already invented it… unless “innovator” is a code word for something else, like thief, for example.

  42. Notice the scam carve-out for universities and tech-transfer offices, AGAIN.

    It’s effectively one species of government lobbying another species.

    Nice.

    Not to mention the rest of it. Ugh. Surely someone, somewhere, will have the time to try to rip this to shreds.

  43. MMM, I was thinking more along the lines of a secured party taking the patents, or the patents being assigned to a secured party in bankruptcy. Regardless, the secured party is simply a moneylender, but a different assignee than the original owner.

    If this assignee cannot enforce his patents because of the Shield Act, why in the world would they loan the money in the first place? Obviously they were not. This will have to impact startups in a major way. But I think that is an intended result.

  44. First, independent inventors and the original assignees are already outside the scope of this law. What’s the issue or was that just a digression?

    Second, if the “purchaser of rights” actually invests money in the “production or sale of an item covered by the patent” then they too are outside the scope of this rule. So again, what’s the issue?

    If the subsequent purchasers sits on his or her rights and then tries to only enforce the patents, then they’re within the scope of the bond requirement.

    Finally, without the bond requirement, any solution is just going to game the system since you’ll follow the troll strategy of setting up an unfunded entity that is effectively judgment proof.

  45. LB, I think the right to petition the government for the redress of grievances is in the First Amendment. This certainly includes the right to file a lawsuit.

    Further I hope you see that the whole point of this Shield Act is to deny access to the courts to patent assignees. The asymmetrical aspects of the law virtually guarantee that interpretation.

    It might have been simpler for the proponents of the Shield Act to simply state that patents held by assignees are unenforceable. A patent assignee cannot even make infringement charges because they may be DJed and still be forced to pay the bond. That would be essentially a taking without compensation.

    Regardless, access to the courts is a fundamental right that cannot be unreasonably burdened. I think what the Shield Act is proposing is unreasonable.

  46. I think it reads that way. As well it should. The message should be simple: if you’re an entity looking to get a nuisance settlement, you’d better make dang sure your patent is valid and infringed before starting licensing discussions.

  47. If they’re sold and the company invests money in developing the invention, then no.

    If the startup is failing and it sells its patent rights to someone with no interest in pursuing development of the patent, just licensing litigation, then, yes. Of course, from a lot of people’s perspectives, this is the case that is both annoying and troublesome meddling in the market.

  48. I wonder how this would work in the case of a startup? If the startup fails, it’s patents normally would be the asset that its investors will look to in order to recover some of their investment. Investors could not take ownership of the patents because then they could not sue because of this Shield Act. The patents would have to be sold to a university in order to maintain any economic viability at all.

    I haven’t thought this all through but it does seem that the Act will have a lot of unintended and adverse consequences that are going to affect startups, which I presume everyone here will agree are the intended primary beneficiaries of our patent system.

  49. It’s certainly motivated by moneyed interests – I’m not sure that’s exactly what “cronyism” means. I don’t think this legislation is likely to go too far – there are moneyed interests on the other side as well.

  50. The First Amendment is not a fundamental right?

    Several aspects of the First Amendment are indeed fundamental rights, of course. But what’s your point?

  51. Isn’t access to the court a fundamental right?

    Is affordable access to the civil courts a fundamental right? No.

  52. Do I understand this correctly that a party can be sued in a DJ action and be forced to post a bond, even though he’s a defendant, and must pay full costs if he loses, even though he’s a defendant, without a finding that his defense lacks merit?

    I think there is something fundamentally wrong with this at so many different levels that I can’t even begin to enumerate them.

  53. Yeah I noticed the that likes of IBM will be “shielded” when they pursue their own patents. They are the original assignee and will not have to prove that they actually practice the invention, which in many cases, I assume they do not.

  54. So what? The proposed law would not burden a fundamental right, and distinguishing between practicing and non-practicing entities is not a suspect classification.

  55. A novel idea: have lady justice wear blinders (because “who” owns a patent has eveything to do with the agenda, er, um, justice underfoot).

    From the wiki:

    The blindfold represents objectivity, in that justice is or should be meted out objectively, without fear or favour, regardless of identity, money, power, or weakness; blind justice and impartiality. (emphasis added)

    Those with money and power have struck with the drumbeat of fear, driving favor against those of a certain identity.

  56. As I indicated on the other thread, PEs who happen to not practice a particular patent that they seek to enforce are NPEs under this proposed legislation.

    This bill has all the earmarks of bad legislation, add both over-inclusion and under-inclusion to the list.

  57. Maybe.

    As applied, the target of the legislation is straddled with an financial hurdle that makes access to the courts (and the only mechanism for enforcement of legally obtained rights) unobtainable…

  58. Here’s what I just sent my Representative:

    Message Subject: Rep. Chaffetz’ HR 845 harms small businesses and independent inventors
    Message Text:
    I am a Patent Attorney, as well as an independent inventor and co-owner of a small software start-up. As a Patent Attorney I’ve done work for Novell, Microsoft, Symantec, PowerQuest, other companies, and for independent inventors. The opinions expressed here are my own, not necessarily those of any client. HR 845 would amend 35 USC 285A(d) to define patent litigation parties who are not subject to posting an ill-defined but likely very large bond. The bond requirement is meant to prevent litigation by any party who does not fall within the listed exceptions. But that definition effectively excludes many independent inventors and small businesses. Independent inventors often file a patent application to stake their claim to an innovation and then seek investment, assured that their idea will not be stolen because it is described in their patent application. This approach (file first, then seek investment) will occur even more frequently after the March 16, 2013 transition to First-Inventor-to-File under the America Invents Act. They are prudent to file first, to protect their rights as inventors. The patent application rights can then be marketed to companies that are interested and better suited than the inventor to commercialize the invention. Similar paths are followed by small businesses, who file first to protect their rights and then seek investment from (or acquisition by) larger companies, based on the value of the patented or patent-pending technology. But under proposed 35 USC 285A(d)(1) this won’t be a realistic option because the purchaser of rights would not itself have filed the application, so the giant bond would be required of them to enforce their acquired patent rights. This amendment will also not hinder large NPEs such as Intellectual Ventures that can afford to put inventors on their payroll. Please do not support this bill, and please advise Rep. Chaffetz of these problems in his bill. Thank you for your time.

  59. SHIELD has all the “fingerprints” of the so-called Coalition for Patent Fairness. Just another effort by the Goliath multinational computer hardware and software companies to again tilt the playing field against the Davids who dare to challenge them.

  60. Don’t laws like this violate the equal protection clause? If you do legal thing A)(not manufacture something) then legal thing B) (suing someone) is illegal for you but if you if you don’t do legal thing A(not not manufacture something; i.e., manufacture it) then legal thing B) is not legal for you.
    Can they really make the manufacture of something a license to sue?

  61. I think the definition of “original inventor” would also capture a lot more than just the typical NPE/troll.

  62. “(1) ORIGINAL INVENTOR- Such party is the inventor, a joint inventor, or in the case of a patent filed by and awarded to an assignee of the original inventor or joint inventor, the original assignee of the patent.”

    If you look at the PatentFreedom website, you will see that this could cover up to 75% of all known NPEs. The question then is, do the remaining 25% cause so much harm that legislation – which will immeasurably increase the ability of deep pocket defendants in patent cases to make it more expensive and time consuming for all less well resourced plaintiffs – is necessary to curtail their activities.

    From where I sit, there has been a lot of hype, flawed analysis and questionable research surrounding the issue of NPEs (for example, the oft-cited $29 billion NPEs cost US companies, produced by Bessen & Meurer, is a highly dubious statistic – see Schwartz & Kesan, “Analyzing the Role of Non-Practicing Entities in the Patent System”).

    If SHIELD passes, the US will end up with legislation that has little effect on the activities of most NPEs, while considerably harming the ability of many patentees to defend their rights. Surely the US patent system is too important for changes to be made to it based on anecdote, hunch and theory.

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