For the last three years, partisanship and division have crippled Congress. But we're now seeing signs that Democrats and Republicans in Congress are putting their differences aside and working together. The budget deal brokered by Senator Patty Murray (D-WA) and Representative Paul Ryan (R-WI) is one example of this cooperative spirit. Another is Congress' recent work to combat patent abuse.
Earlier this month, the House passed the Innovation Act on a broad bipartisan vote of 325-91. This bill, introduced by House Judiciary Chairman Bob Goodlatte (R-VA), allows for new transparency in patent disputes. Today, the Senate Judiciary Committee held a hearing on "Protecting Small Businesses and Promoting Innovation by Limiting Patent Troll Abuse." We hope that this hearing will help Chairman Leahy and members of the Senate Judiciary Committee build on the momentum of the House effort. Passage of a strong Senate bill is needed to stop abusive patent litigation and give businesses relief from this pernicious threat.
The broad bipartisan support for reform to address abusive patent litigation reflects the cross-section of businesses and non-profits targeted by patent trolls. Businesses of every size and sector have been targeted, including restaurants, grocery stores, retailers, hotels, airlines, transit agencies, hospitals and even charities. Many of the alleged patent infringements are for simple, everyday business practices, like providing Wi-Fi to customers or using online shopping carts and store locators. The trolls' intimidation and abuse costs our economy $80 billion annually, money that otherwise would be used to hire workers or innovate.
The Innovation Act addresses several issues that will discourage abusive patent litigation and deter patent trolls. This bill brings much needed transparency to the patent litigation system, ensuring that trolls are clear about who they are and what activity is violating their specific patent. It will make trolls think twice before filing weak or junk lawsuits by requiring judges to award attorneys' fees to the victims of the frivolous lawsuit. These are all important changes that will go a long way towards stopping the trolls.
As debate in the Senate heats up, we hope that the bad patents fueling the epidemic of abusive litigation are also addressed. A disproportionate number of troll lawsuits are over patents on business methods. Troll suits involving business method patents have increased at an average rate of 28 percent per year since 2004, and are nine times more likely to be litigated than other patents. That's because -- by the U.S. Patent Office's own admission -- many of these patents are low quality and should not have been granted in the first place.
To encourage companies to fight back against trolls and get these bad patents out of the system, businesses need a cheaper and quicker alternative to litigation. Expansion of the Covered Business Method (CBM) program will provide such an alternative by allowing companies targeted by trolls to challenge the validity of business method patents at the U.S. Patent and Trademark Office rather than in court. This program is already in effect for business methods related to financial services and should be expanded to include all business method patents. We encourage the Senate to incorporate this bipartisan proposal, which is supported by the White House as well as the airline, hotel, grocery store, retail, gaming, printing and app developer industries, into patent litigation reform legislation before it reaches the president's desk.
Some patent holders are concerned that expanding this program will have the unintended negative consequence of undermining their own patents. These concerns are unfounded. CBM is a narrow program under which challenges are allowed only against patents that have been asserted. Furthermore, only business method patents can be reviewed, meaning all medical, pharmaceutical and technological patents are excluded from the program. And for a challenge to be accepted, the Patent Office must determine that the patent in question is "more likely than not invalid," a high threshold. Additionally, the CBM program will not be misused to delay litigation between competitors because courts can deny stays that would harm the patentee.
Democrats and Republicans alike support reform to stop patent abuse and want to give business a much-needed boost. The Obama administration has also urged action and been supportive of these proposed reforms. With broad support in Congress and the Administration, now is the time to pass strong patent litigation reform that stops patent trolls once and for all.
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