Entrepreneurs Want Patent Trolls Gone, But Current Legislation Is Sloppy
The Innovation Act (H.R. 3309) -- expected to be voted on in the House of Representatives as early as today -- flew through committee a couple weeks ago with an overwhelming majority.
The bill aims to crack down on so-called "patent trolls" – individuals or companies that sue entrepreneurs for infringing on patents they own but don't use. President Obama has aggressively spoken out against trolls, saying that they “extort” money from innovators. Trolling costs businesses about $80 billion each year, by some estimates.
If passed, the Innovation Act would increase the standards required to bring a lawsuit against an innovator and make patent claims more transparent. The act, which was introduced by Representative Bob Goodlatte (R., Va.), also requires that the U.S. Patent Trademark Office reaches out to small businesses to educate them about patent law among other provisions.
Goodlatte says the bill will reduce unnecessary lawsuits against entrepreneurs. “Abusive patent litigation is having a significant impact on American innovation, needlessly costing small and large businesses alike tens of billions of dollars every year,” he said in a statement. “This legislation will help fuel the engine of American innovation and creativity, help create new jobs and grow our economy.”
A group of eight business organizations sent a letter to the House of Representatives today urging them to pass the law. “Patent trolling works because patent trolls offer to settle for less than litigation would cost. That means they single out small businesses as targets. More than half of defendants in lawsuits brought by patent trolls are small businesses ($10 million or less),” the letter says. “Patent troll lawsuits are thus effectively imposing a significant tax on investment and entrepreneurship.”
Related: Obama Goes After 'Patent Trolls'
While there is little disagreement that patent trolls need to be reined in, opponents and supporters alike say that the current legislation was thrown together too quickly and needs to be revised. (Then again, anything involving both lawyers and politicians is almost guaranteed to be met with discord.)
The National Small Business Association, a Washington D.C.-based advocacy group, says the bill is a rush job -- brought to the floor for a vote exceedingly quickly, and poorly written, effectively undermining its goals. The NSBA says the speed with which the legislation has been moved through Washington D.C. is “alarming” and ought to be slowed.
“Unfortunately, this bill goes far beyond what we believe is reasonable and will ultimately do more harm to small inventors than it does to reduce the number of frivolous lawsuits faced by small firms,” says NSBA President and CEO Todd McCracken in a statement. “This is too important an issue for too important a sector of our economy to push forward without a more detailed analysis.”
For example, the increased amount of information that would be required of inventors and small-business owners if the bill passes could become an unnecessary burden, McCracken said in a letter to the House of Representatives.
The White House released a statement this week mostly in support of the measure, but also acknowledged the bill's weaknesses. The administration expressed concern over lengthy patent review proceedings which would be implemented if the bill were to become law and pressed that “recognition is given to the importance of judicial discretion in balancing competing interests” before a final bill is passed.
Catherine Clifford is senior entrepreneurship writer at CNBC. She was formerly a senior writer at Entrepreneur.com, the small business reporter at CNNMoney and an assistant in the New York bureau for CNN. Clifford attended Columbia University where she earned a bachelor's degree. She lives in Brooklyn, N.Y. You can follow her on Twitter at @CatClifford.