Sen. Schumer to Introduce Bill to Crack Down on Patent Trolls

Bill would allow for review

Patent trolls, companies that don't produce or manufacture products, but make a living buying up patents in order to sue other companies, may not have long to prosper—if Congress can figure out a way to stop them.

The latest solution will come next week from Sen. Chuck Schumer (D-N.Y.), who plans to introduce a bill to crack down on the practice, which has been a costly nuisance to companies, especially in the tech and Internet businesses.

Many companies sued by patent trolls, especially smaller companies, tend to settle rather than shell out several million to defend themselves in court. What makes the suits so frivolous is that companies are defending the use of common sense-type Web practices like online shopping carts or drop-down menus. A widely quoted Boston University study puts the cost of patent troll litigation at $29 billion in 2011.

Schumer's bill will aim to keep some of those cases from even getting to court by allowing claims to be reviewed administratively by experts at the U.S. Patent and Trademark Office, which is already reviewing 20 cases in a temporary patent review program. The bill would make the temporary review program permanent, and make it available to include more businesses, such as start-up tech companies.

"This legislation will provide small technology start-ups with the opportunity to efficiently address these claims outside of the legal system, saving billions of dollars in litigation fees," Schumer said in a statement.

Sen. Patrick Leahy (D-Vt.), chairman of the Judiciary Committee, has said that taking up patent reform is a priority. "There is more Congress can do to improve the patent system and address the problem of patent trolling, by increasing transparency and accountability," Leahy said.

On the House side, Sens. Peter DeFazio (D-Ore.) and Jason Chaffetz (R-Utah) introduced the Shield Act, which would force plaintiffs to pay all of a defendant's legal costs if the patent suit fails in court. A House Judiciary subcommittee has already held one hearing on abusive patent litigation.