The Innovation Act

November 22, 2013

The Innovation Act – Protecting Businesses from Harmful Patent Litigation

Speed and innovation have become crucial business tools of the communications age, but litigious patent trolls stifle innovation by filing questionable patent-infringement lawsuits. The Innovation Act of 2013 seeks to reduce the number of frivolous lawsuits and unsupported complaints by requiring greater responsibility from people who file lawsuits and forcing losers to pay the winning side’s legal fees. The new laws includes criminal penalties for willful abuse of the system.

Terms of the Innovation Act

The Innovation or SHIELD act enjoys broad-based bipartisan support, but the business community of entrepreneurs, inventors and small businesses should support the measure to protect their interests. The law makes it harder for so-called trolls to file unsupported, frivolous or fraudulent patent-infringement suits that beleaguer start-up companies, small businesses, entrepreneurs, and corporate giants.

  • The law’s transparency provisions require plaintiffs to reveal who benefits from litigation.
  • Attorney fees are awarded to the winning party.
  • Plaintiffs must describe how their rights have been infringed with detailed specificity
  • Plaintiffs can no loner file alternative civil suits, and all infringement cases fall under federal jurisdiction.

Why Patent-trolling Thrives

Responding to easier communications, increased research options and global marketing of technical breakthroughs, patent holders seek ways to profit by filing lawsuits. Companies with complex products that use many technologies choose to settle cases instead of fighting back in court. The new law will force the losing side in court cases to pay all associated legal costs, and Host Merchant Services strongly supports the business benefits that the new law should generate.

Patent Trolling is bad.

In 2011, patent-related litigation cost the economy more than $29 billion including more than 5,800 lawsuits, so many companies settle frivolous cases to avoid protracted legal battles. Companies fear to lose their right to market successful products even when cases seem heavily weighted in their favor. Small shell companies routinely attack high-profile corporations like Facebook, Apple and Google hoping to score a financial settlement.

Every argument has two sides, but the Innovation Act of 2013 still protects people with legitimate cases and punishes companies that willfully infringe on protected technology. Plaintiffs merely need to show how each patent has been infringed with specific and detailed explanations.

Frivolous lawsuits on the other hand inhibit innovation, raise prices to compensate for corporate legal costs, and discourage information-sharing among creative thinkers. Patent trolls work the current system by looking for easy marks, quick settlements and products that use technology similar to processes that are protected by obscure or outdated legal claims. The Innovation Act protects small businesses, reduces legal costs for innovative companies, and generally supports a more business-friendly environment for entrepreneurs from all industries. At Host Merchant Services, we support thoughtful legislation that strengthens business and encourages advances in technology.

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