Phillips, the lone speaker in favor of patent reform at the event, called the Innovation Act a "modest" reform of patent law in response to growing problems caused by patent trolls. The bill would have required plaintiffs in patent infringement lawsuits to identify the patents and claims infringed in initial court filings, in an effort to reduce the number of lawsuits with vague patent claims. The bill would have also required losing plaintiffs who file questionable infringement cases to pay defendants' court fees in many cases.
The bill would also have allowed manufacturers and suppliers to intervene in patent litigation against their customers. In recent years, some patent trolls have targeted end users of technologies that allegedly infringe their patents in an effort to collect more patent license fees or court awards.
While the percentage of patents involved in lawsuits may have remained steady in recent years, the sheer number of patent infringement lawsuits has grown significantly, Phillips said. The number of patent lawsuits filed in the U.S. doubled between 2009 and 2013, he said. The number of patent lawsuits have grown because of a larger number of patents being awarded.
Many of the lawsuits are brought by non-practicing entities [NPEs], companies focused on collecting licensing fees and not on commercializing their patents, Phillips said. In 2013, more than 60 percent of infringement lawsuits were filed by NPEs, compared to less than 30 percent in 2009, he said.
In addition, NPEs are increasingly filing lawsuits against companies using patented technologies, including retail outlets, financial services firms and hotels. "A rapidly expanding number of industries are getting hit," he said. "More often than not, they're small firms."
In many cases, the targets of patent infringement lawsuits are small businesses with small legal teams or start-ups with new funding, Phillips said. "It's not about the money being made by infringing," he said. "It's about finding an easy mark and targeting them. That is trolling."
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