Yesterday I was proud to support H.R. 3309, the Innovation Act, which will help to rein in patent trolls, which have seriously damaged American businesses and consumers.
Patent trolls are companies or individuals who obtain overbroad patents, and then send letters to actual innovators alleging infringement -- often without clearly identifying themselves or the patent at issue -- to demand money. If they sue, they may deliberately run up discovery costs to pressure the defendant into a settlement. Patent trolls may use shell companies in order to obscure ownership of the patent, sensing a large return on investment from threatening lawsuits against small entities that cannot afford to defend themselves in court.
Organizations of all sorts are being targeted by patent trolls and face costly but unwarranted licensing fees and settlements. This is affecting non-profits that have been asked for $1,000 per employee just for using scanners, and thousands of small businesses that have received letters seeking licensing fees simply for providing wifi to customers.
These businesses and organizations are either faced with the choice of not providing certain services or charging customers exorbitant costs for their use. In most cases, the targeted small organizations cannot afford to go to court to defend themselves. But when they do, the trolls lose over 85 percent of the time -- indicating that most of these lawsuits are not legitimate. In our current system, however, it is too costly and time-consuming to defend against their attacks.
Sadly, the impact of patent troll activity is estimated to be $29 billion per year. This is money that could be better spent by Silicon Valley innovators on research and development, and by small businesses on improving customer service or expanding operations. Patent trolls are stifling our economy.
I cosponsored and support the Innovation Act because it is an important first step toward addressing this problem. It will allow the targets of patent suits to know what they are alleged to be infringing and who is bringing that allegation forward. It will shift the costs of litigation to patent trolls who lose cases that are deemed to be not reasonably justified, making it easier for defendants to fight off attacks. It will change the rules of discovery so that defendants will not be subject to wide-ranging requests that run up costs and drag out the process -- an effort to drive frivolous cases to settlement. And it will allow manufacturers to step in and assist their customers who are accused of infringing on a patent simply for using a product they purchased off the shelf.
H.R. 3309 enjoys broad, bipartisan support because it will make the patent system stronger, stop abusive behavior that has hampered the system, and save the court's time and limited resources. It passed the House easily, and I look forward to working with the Senate so that we can send a bill to the president and remove the threat of patent trolls from the American economy.