Retail, tech industry become latest players in the war on patent reform

Support for the CBM clause of the Innovation Act varies

Controversy brought on by patent trolls continues to cause a stir in multiple industries, and with Congress under more pressure than ever to address the ongoing issue, the markets affected are looking for answers.

Most recently, retailers and technology companies have been in the spotlight for patent infringement lawsuits brought on by conflict regarding the display of their websites and the use of online services such as offering search engines, drop down display menus and catalog images on their websites. JC Penny and LL Bean are among the retailers targeted in such lawsuits as of late.

On Nov. 20, The Innovation Act was sent to the House committee on a 33-5 vote to determine the future of patent reform. However, what the vote didn't show is the deep divide in the tech industry over the specifics of the bill.

According to a report from ComputerWorld, The Innovation Act includes a rule that allows a defendant in a business method infringement suit to challenge a patent's validity before the U.S. Patent and Trademark Office (USPTO). That administrative challenge, which deals with covered business methods (CBMs), can stop a lawsuit for up to 18 months and lead to low-quality patents if they are found to be too broad, vague or abstract.

Furthermore, the CBM challenge has the potential to be a strategic tool since it could overthrow problematic patents used by trolls. However, to that end, the challenge can also be used to attack revenue-producing patents held by mainstream technology firms.

Under the CBM expansion, small businesses can benefit from a CBM process since over half of the companies fighting patent troll cases have annual revenues of $10 million or less, according to a recent New American Foundation study.

There is no advantage for a defendant in a patent suit. Settling can oftentimes be less expensive than taking the time and energy to actually fight the lawsuit.  

As in most patent cases, the first step is becoming thoroughly informed before taking action against the other party. The Innovation Act creates a risk for anyone who brings an infringement lawsuit, because they could end up paying the defendant's legal costs if a court determines the case wasn't justified.

What does this kind of patent reform mean for businesses? Smaller businesses might want to be careful before they go after large competitors, as they might not have a leg to stand on.  Most businesses will be safe if the plaintiff’s positions aren’t reasonably justified. While the push for reform is far from settled, problems created by patent infringement claims continue.

 

For more news on patent reform, check out these related articles:

 

Retailers join war against patent trolls

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Contributing Author

Stefanie Mosca

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