NSBA Opposes Patent Bill

May 4, 2016

pic-patent-licenseOn May 3, NSBA sent a letter to the Senate Committee on the Judiciary leadership—Chairman Charles Grassley (R-Iowa) and Ranking Member Patrick Leahy (D-Vt.)—urging them to oppose the Venue Equity and Non-Uniformity Elimination (VENUE) Act of 2016 (S. 2733).The legislation was introduced by Sen. Jeff Flake (R-Ariz.) and is largely based off of portions of the Innovation Act (H.R. 9) which NSBA opposed and which stalled in the House last year. The legislation currently has two cosponsors, Sens. Cory Gardner (R-Colo.) and Mike Lee (R-Utah).

S. 2733 targets forum shopping by plaintiffs in patent cases. In those cases, plaintiffs deliberately seek out jurisdictions with histories of awarding large sums to patent holders. If passed, S. 2733 would narrow the venue options for patent holders looking to enforce their patent rights against alleged infringers. Currently, a patent holder may choose to litigate a patent case in essentially any jurisdiction where the alleged infringer has continuous contacts. In practice this allows the patent holders a great deal of flexibility in potential venues.

Some plaintiffs, specifically “patent trolls”, abuse the existing system and file spurious litigation in jurisdictions with long histories of significant patent-holder awards to increase their leverage when negotiating settlements. This legislation is purportedly an attempt to curb this practice. However, it does so by narrowing venue options for all litigants, not just those who are actually causing the problem. Under the new requirements in the legislation, small-business patent holders may be left with no option other than litigating in the defendant’s home jurisdiction, conferring a significant advantage to the alleged infringer.

NSBA opposes one-sided patent reform that does not account for small-business patent holders seeking to enforce legitimate patent rights. Small businesses create 16 times more patents per employee than larger companies and are one of the most important set of stakeholders in the patent landscape. However, changes to the patent system in recent years have made it more difficult and expensive for small businesses to enforce their rights and has subsequently driven down the value of patents. Patents represent an enormous investment to small businesses and they are also the incentive for small businesses to innovate. Patent rights must be protected or small businesses will no longer be able drive innovation in this country as they currently do.

To read NSBA’s letter of opposition, please click here.