House passes tech backed bill to rein in 'patent trolls'

WASHINGTON (Reuters) - The House of Representatives on Thursday approved a bill aimed at reining in “patent trolls,” companies that buy or license patents from others, then extract licensing fees or file infringement lawsuits viewed by many as frivolous.

The chamber of the House of Representatives stands at the U.S. Capitol Building in Washington December 17, 2012. REUTERS/Joshua Roberts

The House passed the bill easily, by a vote of 325 to 91. A Senate panel considering a similar measure has scheduled a hearing on it December 17.

The White House has also expressed support for the legislation as part of a broader call it made in June for steps to curb abusive patent lawsuits.

Sponsored by Robert Goodlatte, Republican of Virginia, it targets much-criticized patent assertion entities, for behavior like sending large numbers of licensing demands to small businesses without determining if they actually use infringing technology.

Goodlatte said his bill “takes meaningful steps to address the abusive practices that have damaged our patent system and resulted in significant economic harm to our nation.”

“We have seen an exponential increase in the use of weak or poorly-granted patents by so-called patent trolls to file numerous patent infringement lawsuits against American businesses with the hopes of securing a quick payday,” he said.

But others worry that the bill could hurt small companies whose patents are genuinely infringed. They fear the measure would tip the judicial balance in favor of defendants in patent infringement lawsuits.

“We keep hearing about the trolls, and yes, there is some trouble with the trolls,” said Representative Dana Rohrabacher, a California Republican who criticized Goodlatte’s bill. “Please let’s not rush into a move that would destroy our independent inventors of America.”

Technology companies largely support the Goodlatte bill, including Cisco Systems Inc, Apple Inc, International Business Machines Corp, Google Inc and other powerhouses. The Association for Competitive Technology, which represents small tech companies, also backs it.

Microsoft Corp praised the bill’s advance, saying it “marks a significant milestone toward enactment of common-sense reforms to curb abusive patent litigation.”

The Innovation Alliance, which represents Qualcomm, Tessera Technologies, InterDigital and others, said the vote was a disappointment.

“This debate is far from over. Even many of those who spoke in support of the bill in the House today emphasized that it remains a work in progress, and that further improvements to address the many concerns that have been raised are needed,” said Brian Pomper, the alliance’s director.

The bill encourages judges hearing patent cases to award fees to the winner of an infringement lawsuit. The bill would also require companies filing infringement lawsuits to provide specific details on what patent is infringed and how it is used.

The House approved an amendment to the measure on Thursday that would require companies that send demand letters alleging infringement to identify their corporate parent. The measure was designed to stop the practice of companies sending multiple demand letters to the same target by hiding behind shell corporations.

The White House in June urged Congress to take steps to curb abusive patent lawsuits that have sprung up in recent years, especially in the technology sector.

Goodlatte has worked on the patent issue with his counterpart on the Senate Judiciary Committee, Vermont Democrat Patrick Leahy, who praised Thursday’s vote.

“Targeted reforms should address abuses in the system while ensuring that legitimate inventors can continue to succeed,” he said in a statement. “I look forward to working through the committee process in the Senate to achieve this goal.”

Differences between the House and Senate bills would need to be ironed out before it could become law.

Other patent-related bills are circulating on Capitol Hill although the Goodlatte and Leahy measures are believed to have the best chance of becoming law. In addition, the Federal Trade Commission has a study underway on the impact on competition of abusive patent litigation.

Reporting by Diane Bartz; Editing by Ros Krasny, David Gregorio, Steve Orlofsky and Chris Reese