We previously reported on the proposed Saving High-Tech Innovators from Egregious Legal Disputes Act of 2012 (“SHIELD Act of 2012”), introduced in the House of Representatives as HR 6245 last year. This Act, intended to discourage frivolous patent litigations by so-called non-practicing entities (“NPEs,” or sometimes referred to as “patent trolls”), proposed adding new section 35 U.S.C. § 285A to make fee-shifting available under certain circumstances in patent litigations involving computer hardware and software patents. More specifically, it provided that fees could be awarded to a prevailing defendant upon finding that the party alleging infringement did not have a “reasonable likelihood of succeeding.” As written, the SHIELD Act of 2012 failed to garner sufficient support and died in committee.
A modified version of the SHIELD Act was re-introduced in the House on February 27, 2013, as HR 845 (“SHIELD Act of 2013”), and is currently in committee. As modified, the SHIELD Act of 2013 applies to all patents rather than just to computer hardware and software patents, and eliminates as a requirement finding that the party alleging infringement had no reasonable likelihood of succeeding.
Under the modified Act, a prevailing party asserting patent invalidity or noninfringement may move to recover full litigation costs if the party alleging infringement is unable to prove that it meets at least one condition specified by 35 U.S.C. § 285A(d), or if the Court finds that exceptional circumstances would otherwise make such a recovery unjust. 35 U.S.C. § 285A (d) requires that the party alleging infringement be at least one of: (1) an original inventor, (2) a party commercially exploiting the patent, or (3) a university or technology transfer organization. If a motion is made before the entry of a final judgment and the party alleging infringement fails to prove that it meets at least one condition specified by section (d), that party will be required to post a bond in an amount determined by the Court.
Even in view of this new provision, some critics of the SHIELD ACT of 2013 suggest most defending parties will find that the path of undertaking a full-term litigation against an NPE in order to obtain a cost recovery is unrealistic and over-burdensome, and that the Act will prove to have a lesser impact on frivolous patent suits than intended.
Gibbons will continue to track the progress of this proposed legislation, as well as other related IP law developments.
James J. Kang is an Apprentice in the Gibbons Intellectual Department. Thomas J. Bean, a Director in the Gibbons Intellectual Property Department, co-authored this post.