U.S. Rep. Steve Stivers (R-OH) on March 20 proposed a bipartisan bill that would essentially update the nation’s patent laws and benefit small businesses and startups with inventions, products or intellectual property having official registration with the United States Patent and Trademark Office.
“As a nation, we may not have the lowest wage rate, or the lowest number of regulations, but we do have the best ideas, and protecting those ideas is essential,” said Rep. Stivers.
The Support Technology and Research for Our Nation’s Growth and Economic Resilience (STRONGER) Patents Act of 2018, H.R. 5340, would “strengthen the position of the United States as the world’s leading innovator by amending title 35, United States Code, to protect the property rights of the inventors that grow the country’s economy,” according to the congressional record summary. Stivers partnered with U.S. Rep. Bill Foster (D-IL) on introducing H.R. 5340, which has 14 other original cosponsors, including U.S. Reps. Sean Duffy (R-WI), Bill Huizenga (R-MI), and Dave Joyce (R-OH).
“In the highly competitive global economy, the United States needs to uphold strong patent protections to maintain its position as the world’s premier innovative country,” according to a draft of the bill provided by Stivers’ office. “Unintended consequences” of comprehensive reform of patent laws by Congress in 2011 continue to emerge, according to the draft, including “the strategic filing of post-grant review proceedings to depress stock prices and extort settlements,” and the filing of repetitive petitions designed to harass patent owners.
“Main Street should be just as much of an incubator for innovation as Silicon Valley, and we must ensure that these small patent owners have the same opportunity to compete in the open market,” Stivers said.
Among numerous provisions, H.R. 5340 would establish protections against the practices of so-called patent trolls, which the congressman think largely contribute to the current challenges facing the American patent system.
The Electronic Frontier Foundation (EFF) agrees and describes a patent troll as a business or person who uses patents as legal weapons rather than actually create any new products or develop new ideas.
“Instead, trolls are in the business of litigation (or even just threatening litigation). They often buy up patents cheaply from companies down on their luck who are looking to monetize what resources they have left, such as patents,” according to EFF.
The U.S. Patent Office has a habit of issuing “overbroad and vague patents,” according to EFF. Equipped with such patents, trolls then send out patent demand letters to other companies or individuals they argue have infringed their patents. “These letters threaten legal action unless the alleged infringer agrees to pay a licensing fee, which can often range to the tens of thousands or even hundreds of thousands of dollars,” says EFF.
“Many who receive infringement letters will choose to pay the licensing fee, even if they believe the patent is bogus or their product did not infringe. That’s because patent litigation is extremely expensive — often millions of dollars per suit — and can take years of court battles. It’s faster and easier for companies to settle,” according to EFF.
H.R. 5340 would define sending patent demand letters as a “deceptive and unfair practice,” giving the U.S. Federal Trade Commission new tools to target patent trolls, according to Stivers’ staff.
“Small businesses are our biggest job creators, and those that rely on patents consistently create high-paying jobs. So, this bill is not just about ensuring innovators can innovate, it’s about good-paying jobs and stimulating our local economies,” said Stivers.
Rep. Foster thanked Rep. Stivers for his leadership on the issue, noting that the U.S. economy has relied in part on the patent system’s protections, which have enabled innovation and entrepreneurship to thrive. “Our current patent system, however, has been weakened to the point that it discourages research and innovation rather than supporting it,” Foster said.
In fact, the U.S. Chamber of Commerce in recent years has downgraded the nation’s patent system in worldwide rankings from first to its current ranking of 12th, resulting in eroded investor confidence across a variety of industry sectors, according to Stivers’ staff.
H.R. 5340 has been referred to both the U.S. House Judiciary Committee and the U.S. House Energy and Commerce Committee.