The 2013 Innovation Act: Slaying Trolls or Crushing Small Innovators?

A short talk on the changes to patent law contained in the 2013 Innovation Act passed by the House in December 2013.

Transcript

1. The  2013  Innova.on  Act  
   Slaying  Trolls  or  Crushing  Small  Innovators?  
   Benjamin  Hayes  
   Hayes  Law  Firm,  P.L.L.C.  
   [Image  Source:  Bethesda]
    
   

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2. Clearing  the  House  of  Representa.ves  
   Innova.on  Act  passed  on  December  05,  2013  
   [Image  Source:  GovTrack]
    
   

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3. Patent  Asser.on  En..es  (aka  Patent  Trolls)  
   Person  or  en.ty  which:  
   –  enforces  patent  rights  against  alleged  infringers  in  
   order  to  collect  licensing  fees;  and  
   –  does  not  manufacture  or  supply  products  or  services  
   based  on  its  patents.  
    
   

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4. Trolls  by  the  Numbers  
   •  66%  of  defendants  to  troll  suits  make  $100M  per  
   year  or  less  
   •  55%  of  defendants  in  troll  suits  make  $10M  per  year  
   or  less  
   •  62%  of  all  patent  li.ga.on  was  ins.gated  by  trolls  
   [Image  Source:  RPX  Corpora.on  2013]  
   

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5. Trolls  by  the  Numbers  
   In  2012  for  the  first  .me  patent  trolls  sued  more  non-­‐
   tech  companies  (51%)  than  tech  companies.  
   

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6. 1.  Heightened  Pleading  Requires  disclosure  of  basic  details  (such  
   as  which  patents  and  claims  are  at  issue,  as  well  as  exactly  what  
   products  allegedly  infringe  and  how)  when  it  files  a  lawsuit.  
   2.  Fee  Shi2ing  Requiring  the  loser  in  a  patent  case  to  pay  
   a`orney’s  fees  and  costs.    
   3.  Discovery  Reform  Stays  most  discovery  un.l  the  court  has  
   interpreted  the  patent  and  limits  it  to  “core  documents”.  
   4.  Transparency  Requires  patent  trolls  to  reveal  the  par.es  that  
   would  actually  benefit  from  the  li.ga.on  (called  the  “real  party  
   in  interest”).    
   5.  Staying  Customer  Suits  Requires  courts  to  stay  patent  li.ga.on  
   against  customers  when  there  is  parallel  li.ga.on  against  the  
   manufacturer.   [Image  Source:  United  Ar.sts]
    
   

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7. Harder  for  the  small  guys?  
   – For  a  large  company  that  stands  to  gain  from  
   s.fling  compe..on,  fees  represent  mechanism  to  
   u.lize  against  new  market  entrants  that  lack  the  
   patent  porgolios  and  legal  sophis.ca.on  to  defend  
   themselves.  
   [Image  Source:  United  Ar.sts]
    
   

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8. The  Ugly?  
   [Image  Source:  United  Ar.sts]
    
   

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9. Ques.ons?  
    
    
    
    
   Hayes  Law  Firm,  P.L.L.C.  
   Benjamin  Hayes  
   (713)  320-­‐2960  
   bhayes@startuplegalservice.com  
   Legal  Disclaimer    
    The  informa.on  provided  in  this  presenta.on  is  
    general  and  intended  only  as  a  basic  overview  of  
    corporate  law  and  does  not  cons.tute  legal  advice.    
    
   [Image  Source:  Ma`  Groening/Fox]
    
   

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