In the wake of patent trolling against some Podcasting companies, several House members have devised the SHIELD act to protect people from Patent Trolls.
This is a horrible, terrible bill. I am firmly against it.
If you read the actual bill – http://www.scribd.com/doc/127669554/H-R-845-2013-Shield-Act-re-patent-trolls — it legislates the scenario where a non-original inventor must post a bond covering full court costs in order to litigate a patent claim.
The costs of serious Patent litigation ( not a trolling one ) where it is proven that one party violated another’s patents , averages $3-5 million dollars. Under this law, if an independent inventor wants to sell their invention ( I’m not sure what would happen if a company is acquired ), that invention is no longer covered by the clause and effectively tremendously devalued — requiring bonds that are potentially millions of dollars to be posted if litigation were ever to happen.
The free market effects of this are obvious – it creates an economy where independent inventors have a tremendously reduced ability to sell their innovations , and secondary patent holders can be infringed upon with almost guaranteed impunity.
* Who wants to buy a Patent if you need at least 5 Million dollars to defend it ?
* Why respect a patent if you know the rightsholder won’t be able to raise enough money to sue ?
On top of all this, some of the most notorious Patent Trolls are totally immune from this law. Many of these companies set up co-owned trusts/business entities or licensing schemes where there is joint ownership of the IP Rights with the inventor — enabling them protections under the “original inventor” clause of this bill.
This law does little but ensure that patent litigation can only happen between a David and Goliath, precludes small/medium businesses from exerting patent protections, and seriously undermines the incentive for independent entities or small businesses to support innovation.
It is horribly misguided.
If you want to directly fix the situation, address 35 U.S.C. § 285 : “court in exceptional cases may award reasonable attorney fees to the prevailing party.” Tone down “exceptional” and attorney fees can be awarded when appropriate. Create a USPTO review and recertification process for (oft?) litigated patents. Create a variety of means to directly address the issue of Patent Trolling , without damaging inventors.
Stopping Patent Trolls can – and should – be done… but this law is an attack on individual inventors and the incentive to innovate / fund research & development.