A bipartisan group of senators — including Charles Grassley, a Republican of Iowa, and Patrick Leahy, a Democrat of Vermont — introduced a bill last week that should reduce such lawsuits. The Obama administration hasexpressed support for the bill, too.
The Senate bill would allow the manufacturers of products like computer equipment to step in and fight claims on behalf of their customers. This should cut down on lawsuits because some patent owners sue or threaten to sue the users of technology, rather than large technology companies like Cisco Systems and Microsoft, because small businesses are more likely to settle than engage in a costly legal battle. But technology companies, not end users, are in the best position to defend their products in courts. In many cases, these businesses would want to take on such cases to protect their reputations.
One important provision in the bill would allow judges to order the loser in a patent case to pay the winner’s legal fees, if the case was not “objectively reasonable.” Currently, judges can only award fees in “exceptional” cases. Judges should have greater discretion to deal with frivolous and abusive cases. The Senate approach is a clear improvement over a bill approved by the House in December 2013 that went too far by requiring losers to pay attorney’s fees unless judges determined that cases were “reasonably justified” or that special circumstances made an award unjust.
Another provision would require patent owners who send letters alleging that a business is infringing on their patents — a step that usually precedes the filing of lawsuits — must clearly explain their allegations. Companies that send out letters with fraudulent or misleading information could face civil penalties levied by the Federal Trade Commission.
Negotiations over a patent bill stalled in the Senate last year because some universities, technology companies, trial lawyers and pharmaceutical businesses asserted that the legislation would have gone too far in several ways, like imposing strict limits on when parties in a patent case can seek documents from the other side. Lawmakers have learned from that failure and taken the legitimate concerns of patent holders into account. The latest bill strikes a good balance and deserves approval.