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U.S. House panel takes up bill targeting 'patent trolls'

Wednesday, 20 Nov 2013 | 4:16 PM ET

WASHINGTON, Nov 20 (Reuters) - A congressional panel on Wednesday took up a bill targeting patent "trolls," companies that buy or license patents from others and then aggressively pursue licensing fees or file infringement lawsuits.

The House of Representatives Judiciary Committee was considering a measure that appeared to have the best chance of reining in patent assertion entities, known derisively as "trolls." The White House in June urged Congress to take steps to curb abusive patent lawsuits that have sprung up in recent years, particularly in the technology sector.

The patent reform bill, introduced by Rep. Robert Goodlatte, was expected to clear the committee and proceed to the full House of Representatives after stripping out a measure which would have changed how the U.S. Patent and Trademark Office reviews software patents to determine if they are valid.

The bill aims to increase transparency in the patent litigation system.

In one case, a patent assertion entity, or PAE, demanded licensing payments from retailers who provided services to customers such as free Wi-Fi.

"Within the past couple of years we have seen an exponential increase in the use of weak or poorly granted patents against American businesses with the hopes of securing a quick payday," said Goodlatte, a Virginia Republican, who chairs the committee.

"These suits target a settlement just under what it would cost for litigation, knowing that these businesses will want to avoid costly litigation and probably pay up," Goodlatte said.

The bill requires judges hearing patent cases to award fees to the winner in an infringement lawsuit, unless the judge decides that the loser's position was "substantially justified" or some other circumstances exist.

The bill would require companies filing infringement lawsuits to provide specific details on what patent is infringed and how it is used. It also would allow tech companies to jump into lawsuits filed against their customers. For instance, a company that makes Wi-Fi equipment could defend a bakery accused of infringing Wi-Fi patents by simply installing a router.

Goodlatte has worked on the patent issue with his counterpart on the Senate Judiciary Committee, Vermont Democrat Patrick Leahy.

Leahy, along with Senator Mike Lee, a Republican from Utah, launched a bill on Monday that would require patent holders to disclose ownership when they sue and would allow manufacturers to step into lawsuits to protect customers accused of infringing.

While similar in some respects, the House and Senate bills also have significant differences that would need to be ironed out by lawmakers if each is passed.

Other proposals are circulating on Capitol Hill, and the Federal Trade Commission has a study underway the impact on competition of abusive patent litigation.

Patent experts such as Adam Mossoff, who teaches at George Mason University School of Law, have urged Congress to be cautious in changing patent law because of the danger of hurting companies whose patents are genuinely infringed.

Internet companies largely support the Goodlatte bill, and the effort is backed by Cisco Systems Inc, Apple Inc , Google Inc and other technology powerhouses.

To read the text of H.R. 3309, Goodlatte's "Innovation Act," see