A Win for Innovation and Intellectual Property

Michi Iljazi

April 27, 2015

This article appeared in Real Clear Policy on April 24, 2015

As the world celebrates World IP Day on Sunday, intellectual property is becoming one of the most important issues facing Congress. Protecting IP is a core government function that can help grow the economy, which in turn helps taxpayers and consumers.

The growing threat of “patent trolls” has become a major area of concern among those who want to ensure that patents are still a vibrant part of the creative process. Patent trolls in most cases do nothing to innovate; instead, they obtain patents for the purpose of filing lawsuits and clogging up the courts. For example, the company Lodsys exists solely to target small application developers. They do not make or sell anything; they just go after creators and claim patent infringement. In 2011, patent trolls cost the economy $80 billion and discouraged future innovation by raising creators’ risk of frivolous lawsuits.

A bipartisan House bill called the Innovation Act is designed to address this problem. Among other reforms, the legislation would require courts to decide on the validity of a patent on a faster timetable. This will make it harder for patent trolls to drag out a lawsuit in order force a settlement. As the Wall Street Journalhas reported, the bill would also “require plaintiffs to disclose who the owner of a patent is before a lawsuit is filed and demand that plaintiffs explain why they are suing a particular defendant in their court pleadings.”

According to an op-ed by Tim Lee with the Center for Individual Freedom, “the Innovation Act is narrowly targeted to address bad actors while maintaining the broader integrity of the patent system itself. For example, the bill’s reforms would increase transparency in the litigation process by heightening pleading standards. Accordingly, parties would be required to provide more detailed information to support their allegations, instead of their current habit of relying upon vague and threatening demand letters.”

It is important that this legislation be brought to the floor in both chambers of Congress. There are currently millions of dollars being wasted in litigation costs that would otherwise be invested in other more productive areas. In a piece for The Daily Caller, Chuck Muth of Citizen Outreach described the high costs businesses are burdened with and the possible legal entanglements, noting that “most businesses can expect to pay about $1.3 million to settle a trolling lawsuit and about $1.75 million if they have to go to trial.”

Reforms that benefit all stakeholders who want to contribute will only help to boost the nation’s economy and provide even more incentive for groups and individuals to invest in new ideas. Washington can deliver a win for intellectual property.