SHIELD Act aims to reduce speculative patent suits

Proposed bill could be the right tool to curb wasteful infringement litigation

Notice of a patent infringement suit is never a welcome message. Even worse is realizing the plaintiff is not one of your company’s competitors, but instead is a “non-practicing entity” (NPE) —a holding company that has bought the patent just for the purpose of suing you. While fellow industry players can be fierce, ruthless competitors, counsel for both sides also recognize that their respective businesses have customers to serve and that patent litigation is ancillary and distracting to their core businesses. This usually leads to cooler heads finding ways to avoid most intra-industry patent infringement claims.

Not so with non-practicing entities. Litigation is their business, so strategic options like cross-licensing or a retaliatory infringement suit are generally not available to the operating company defendant. The NPE is looking for money, either via a large jury award or a settlement.

Contributing Author

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David J. Kappos

David J. Kappos is a partner at Cravath, Swaine & Moore LLP. He is widely recognized as one of the world's foremost leaders in the...

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