Across the country, backlogs in federal courts can delay trials and stymie economic growth. Among other things, plaintiffs and defendants spend a lot of money in litigation and attorneys’ fees, and delays in settlement often disrupt business plans and put new initiatives on hold. Particularly pernicious are frivolous patent infringement lawsuits filed by non-practicing entities (NPEs), which cause backlog and burden innovative companies.
Federal law enforcement and the executive branch must act. Curbing NPEs and restoring the prosecution process for low-quality patents through increased transparency in patent infringement litigation has the dual benefit of reducing courtroom waste and delays while boosting the U.S. economy.
NPEs, also known as patent trolls, are in the litigation business. Their focus is on making money through patent infringement lawsuits, not on providing goods or services. NPEs file thousands of lawsuits each year and issue threatening dunning letters. They are now responsible for more than half of all US patent litigation. NPEs impose significant costs on the companies they target. The outcome of their lawsuit was $29 billion Reducing investment in R&D will incur direct costs to companies each year, slowing growth. billions of dollars For those they are suing.
In recent years, NPE litigation has been increasingly driven by Third Party Litigation Funds (TPLF), where investors back the litigation as a financial investment.Funders with a financial interest in the outcome of the case encourage litigation Otherwise, litigation will not start and will drag on as plaintiffs and investors try to maximize their profits. The potential for large damages in patent infringement lawsuits has attracted his TPLF, which currently supports near-minimum damages. Quarter NPE litigation. Funders have not been unfairly treated or their patents infringed. Their interest in these cases is purely financial.
While outside investment has fueled an increase in frivolous patent litigation, companies are facing increasing difficulties accessing alternatives to litigation. In 2011, Congress created a patent prosecution process in the United States Patent and Trademark Office (USPTO) as a necessary alternative to costly NPE litigation. Through the Office’s process called inter partes review (IPR), companies sued by NPEs have USPTO experts review allegedly infringing patents and identify patents that should not have been issued in the first place. You can ask to disable it. This process is quicker and cheaper than litigation, and creates an incentive for NPEs to make nonsensical claims.
However, in 2020 the USPTO changed its own examination process by introducing the so-called NHK-Fintiv rules. Fintiv prevented the Office from reviewing patents if it was already involved in a district court case. The rule made it harder and more expensive for companies to defend themselves against legal harassment, and caused more patent disputes to go to court rather than be resolved at the USPTO. rice field.
The system must be rebalanced.
Courts have historically not required defendants and plaintiffs to disclose third-party funders, making it easier for NPEs to take advantage of the legal system. But that is starting to change. Last year, Delaware Chief Justice Colm Connolly ordered that the parties: Disclosure Whether litigation funders are interested in litigation. Delaware was a popular host for his NPE, and his third-party funded NPE was launched after the ruling. fall back their case. As a result, fewer lawsuits were filed in Delaware, and fewer expensive lawsuits against US companies.
Requiring defendants and plaintiffs to disclose third-party funders has strong support from voters in both parties. According to a recent poll by the U.S. Chamber of Commerce Institute for Law Reform, 79% Percentage of likely voters believe third-party litigation funders should disclose their involvement in the case. While there should be limits to disclosure of third-party funding, such as when a nonprofit funded a lawsuit and had no financial stake in the outcome, these Introducing transparency measures would reduce wasteful litigation, boost the economy, and ease the financial burden. legal system. No wonder it is politically popular.
The TPLF’s transparency, combined with the USPTO’s repeal of the Fintiv rule and the reinstatement of the patent prosecution process, will be an important two-pronged solution to reduce court burden and spur economic growth. Greater transparency means fewer investors will spend money on frivolous litigation, and the return of USPTO examination will allow the USPTO to settle more infringement cases instead of the courts.
Such common sense reforms would give courts more resources to devote to resolving legitimate disputes. Innovative companies will be able to invest more in growth instead of funding lengthy legal battles to defend baseless allegations.it is right for the court and American economy.
Bob Goodlatte served as six representatives for VirginiathFrom 1993 to 2019, he served as a district chairman of the United States House of Representatives. From 2013, she chaired the House Judiciary Committee until 2019. Trey Gordy is on the University of South Carolina 4th teamthHe served as a district member of the U.S. House of Representatives from 2011 to 2019. Prior to serving in Congress, he served as a federal prosecutor and attorney (district attorney) for South Carolina.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.
