A new bill introduced in the House of Representatives attempts to deter frivolous patent litigation by forcing unsuccessful patent plaintiffs to cover defendants' legal costs. Introduced by Rep. Peter DeFazio (D-OR) and co-sponsored by Rep. Jason Chaffetz (R-UT), the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act is limited to patents related to computer hardware and software.

"Patent trolls don't create new technology and they don't create American jobs," DeFazio said in a news release. "They pad their pockets by buying patents on products they didn't create and then suing the innovators who did the hard work and created the product."

While DeFazio portrays the SHIELD Act as anti-troll legislation, its provisions don't seem to be limited to non-practicing entities. Any plantiff who a court finds "did not have a reasonable likelihood of succeeding" could be on the hook for his opponent's legal bills, regardless of whether the plaintiff is using the technology in question.

Defining software patents

The legislation would be the first time Congress has defined the term "software patent." The Supreme Court has held that many software-related inventions are ineligible for patent protection. More recently, lower courts have held that many software patents are valid. But all of those rulings were based on interpretation of general language that Congress has not changed since 1952.

The SHIELD Act defines a software patent as a patent covering "any process that could be implemented in a computer regardless of whether a computer is specifically mentioned in the patent" as well as any computer system programmed to carry out such a process. It defines a "computer" as an "electronic, magnetic, optical, electrochemical, or other high speed data processing device performing logical, arithmetic, or storage functions."

The bill is careful not to endorse software patents even as it provides defendants with stronger protections against them. After the courts legalized business method patents in 1998, Congress reacted by passing the First Inventor Defense Act in 1999, which made it easier to defend against business method patent lawsuits. Ever since, supporters of business method patents have argued that the legislation, which was passed to weaken business method patents, nevertheless represented Congressional endorsement of the courts' decision to allow them.

Anticipating the danger that the SHIELD Act could be interpreted in this way, the drafters included a provision that the bill should not be "construed as amending or interpreting categories of patent-eligible subject matter." In other words: just because we're defining "software patent" doesn't necessarily mean software patents are legal.

"Treat software differently"

"The SHIELD Act ensures that American tech companies can continue to create jobs, rather than waste resources on fending off frivolous lawsuits," Chaffetz said. "A single lawsuit, which may easily cost over $1 million if it goes to trial, can spell the end of a tech startup and the jobs that it could have created."

The legislation won kudos from Julie Samuels, the attorney who is spearheading the Electronic Frontier Foundation's Defend Innovation project. "We support policies and legislation that treat software differently," she wrote. "Fee shifting would empower innovators to fight back, while discouraging trolls from threatening lawsuits to start."

The bill could also set the stage for future reforms to the patent system. Once Congress has established hardware and software patents as distinct legal categories, it could become easier to enact further reforms that target those types of patents without upsetting other industries, such as the pharmaceuticals, that rely heavily on patent protection.

Passage of the legislation could be a long shot. Each year, only a small fraction of the bills introduced in Congress wind up on the president's desk. Still, the introduction of the legislation suggests that Congress is feeling continued pressure to fix the patent mess. Congress attempted to overhaul the patent system last year, but the legislation did little to address the patent trolling problem that plagues Silicon Valley.