SHIELD Act

The issue of patent trolling, or nonpracticing entities (NPEs) who collect technology patents for the sole purpose of suing legitimate companies while they themselves produce nothing, has long been a limiting factor in American software and technology innovation. According to a study released by James Bessen and Michael Meurer at the Boston University School of Law, defendants suffered $29 billion in direct costs from frivolous lawsuits in 2011, and a previous study indicated that troll lawsuits like this ended up costing tech companies $500 billion in legal fees, out of court settlements, awards, and hits to share value between the years of 1990 and 2010.

New proposed legislation is targeted at forcing the trolls back under the bridge however, as two congressmen have introduced the Saving High-tech Innovators from Egregious Legal Disputes (SHIELD) Act which would require patent lawsuit plaintiffs to pay their defendent’s legal fees should they lose the suit. In the majority of patent lawsuits, NPEs target smaller firms with the objective of forcing a settlement for a few hundred thousand dollars. In cases such as this, the SHIELD Act would be an effective deterrent as the NPE would have more to lose than they had to gain in pursuing a lawsuit. Hopes are high for the bill, but similar legislation such as the America Invents Act was dismantled in Congress by the influence of lobbyists, leaving it largely ineffective.

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