If the the SHIELD Act passes how will it impact the licensing and patent litigation worlds?

Question

The SHIELD Act was reintroduced into Congress recently (this question previously addressed SHIELD), and I'm wondering if every single would be "licensee/defendant" instead of engaging in licensing negotiations will now just bring SHIELD motions to intimidate licensors. Thoughts?

Answer 1

This bit of new legislation purports to amend Section 285 to allow an accused infringer to file a motion (A) limiting discovery and more importantly, (B) forcing the patentee to pay costs and attorneys' fees if it loses on the issue of infringement or validity.

As part of this proposed rule, the moving party can request that the patentee be required to post a bond covering fees and costs of suit.

Importantly, the trigger for this motion is that the patentee does not fall into one or more of the following categories: (1) inventor or original assignee; (2) substantial investor in exploiting the patent through sales; (3) a university related program.

Normally, this type of legislation would never see the light of day. However, courtesy of a bunch of politicians who seem to have trouble simply keeping the government running, this could actually become reality. The supreme court has demonstrated that their hostility to a 200+ year tradition of patent law is matched by their lack of comprehension of key elements of the 1952 Patent Act. Regarding patents, some of their recent decisions seem to be pandering to their perceived public rather than applying stare decisis.

The bond provision arguably violates the First Amendment. The legislation also seems ambiguous given the reality of patent litigation with multiple patents frequently asserted by both sides. What about declaratory judgment plaintiffs using this as a weapon? "Substantial investor" sounds vague.

Until this radical procedural rule is tested, it may not be taken seriously. And if it does wind up being as radical as it seems, you can count on an exception to swallow the rule. (Remember the Inventor Protection Act?) Perhaps future patents will be enforced only by those who have a record of "substantial investment" if they are not an original assignee. To answer your question, until the amendment has been interpreted, upheld and applied, it will likely only be used by deep-pocket companies in a minority of cases. Maybe someday it will graduate from a side-show to another ring in the circus, but I wont hold my breath.