Today, Representatives Jason Chaffetz (R-UT) and Peter DeFazio (D-OR) introduced HR 845, the bipartisan Saving High-tech Innovators from Egregious Legal Disputes (SHIELD) Act to protect American innovators and companies from frivolous patent lawsuits that cost jobs and resources. The SHIELD Act will put the financial burden on so-called "patent trolls" that buy broad patents on products they did not create and then file questionable lawsuits against companies for infringement.
"Patent trolls drained an estimated $29 billion from American innovators and companies in 2011," said DeFazio. "They pad their pockets by buying patents on products they didn't create and then suing companies from every industry for infringement. These egregious lawsuits have spread to nearly every sector of the economy, costing billions of dollars and countless jobs. The bipartisan SHIELD Act is a targeted reform that will force patent trolls to take financial responsibility for their frivolous lawsuits."
"Patent trolls contribute nothing to the economy. No industry is immune to these attacks. Instead of creating jobs and growing the economy, businesses are wasting resources to fight off frivolous lawsuits. This bipartisan legislation will curb future abuse by requiring trolls to bear the financial responsibility for failed claims," said Chaffetz.
According to a recent Boston University study, patent troll suits cost American companies over $29 billion in 2011 alone.
The SHIELD Act forces patent trolls to take financial responsibility for frivolous lawsuits. If a troll brings a patent lawsuit and loses, the SHIELD Act makes sure that the troll pays all costs and attorney's fees associated with the case. This increased risk will help to deter many trolls from bringing frivolous lawsuits in the first place.
Unlike last year's version of the SHIELD Act, this year's bill applies to all types of patents. No industry is free from patent troll lawsuits. In the past they most heavily targeted technology companies, but recently retailers, manufacturers, podcasters, and even municipalities have been the victims of patent troll lawsuits. The SHIELD Act protects all sectors from troll suits.
The SHIELD Act makes sure that independent inventors, businesses that produce patented items, and universities are not accidentally lumped in with trolls. All of these entities will never be required to pay the opposing party's fees in a lawsuit even if they lose. Only patent trolls that buy patents on the open market, for the sole purpose of using them for predatory litigation, will be subject to fee shifting under the SHIELD Act.
The SHIELD Act is supported by the Consumer Electronics Association, Electronic Frontier Foundation, Engine Advocacy, the National Retail Federation, the Coalition for Patent Fairness, the Consumer and Communications Industry Association, and the online travel industry including Expedia, Kayak, Orbitz, and Travelocity.