| WASHINGTON, March 14
WASHINGTON, March 14 Lawmakers asked on Thursday
whether a bill aimed at stopping abusive patent litigation that
costs companies millions of dollars each year could end up
hurting legitimate companies whose inventions have been
Cisco Systems Inc, Apple Inc, Google Inc
and other tech powerhouses have been pushing for
legislation that would reduce the number of times each year that
they are sued for infringement by a "non-practicing entity," a
company that licenses patents as its business.
Representative Peter DeFazio, an Oregon Democrat, introduced
legislation last month aimed at hurting what critics call
"patent trolls" by allowing judges to force such firms to pay
the legal fees of companies they unsuccessfully sue.
One supporter of that bill is Cisco, which pays $50 million
a year to fight 50 lawsuits filed by companies that do not make
or sell anything, testified Mark Chandler, general counsel for
Cisco has been further aggravated by lawsuits filed against
non-tech companies, like coffee shops, which bought and
installed Cisco's Wi-Fi routers.
However, the prospect of a bill that required the
non-practicing entity to pay legal bills if they lose an
infringement lawsuit worried several lawmakers, including
Representative John Conyers, a Michigan Democrat.
"We have a measure before us that the plaintiff pays and the
defendant who might be an alleged patent infringer pays nothing.
This is disturbing," he said.
"To the extent the bill was designed to protect against
meritless claims of patent infringement I suspect that the tools
to deal with this already exist," he said.
DeFazio's legislation allows a judge to decide whether the
non-practicing entity should bear the defendant's costs if the
defendant wins. Plaintiffs would automatically be exempted if
the original inventor was on the complaint, if the company
filing the complaint used it or if a university filed the
Non-practicing entities sued 5,570 defendants in 2011, twice
as many as in 2009, Chandler said, citing RPX Research Patent
Unlike previous years when patent lawsuits focused almost
exclusively on manufacturers, retailers, restaurants and other
companies that have websites or provide Wi-Fi have been hit,
including department store operator JC Penney Co.
The chain's General Counsel Janet Dhillon said that it faced
no patent cases four years ago but had since been accused of
infringing patents that cover drop-down menus on a website,
activating a gift card, Web browsing on a mobile phones and
putting a purchase in an electronic shopping cart, among others.
"The cost to defend these suits is why we have to settle so
many," she said.
The result is that patent litigation now accounts for about
half of the chain's total litigation, and JC Penney is now
reluctant to buy technology from smaller companies that could
not defend it if an infringement lawsuit were filed, she said.