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New Bill Introduced Aimed at ‘Patent Trolls’

Whether measure has bearing on radio’s music automation patent suit will be interesting

A bill introduced into Congress designed to protect companies from frivolous lawsuits could potentially have a bearing on the patent dispute between radio stations and Mission Abstract Data/DigiMedia over music automation software.

Several computer hardware and software companies, as well as the Consumer Electronics Association, support the SHIELD Act. CEA says the bill would “take a club to patent trolls” if passed.

Oregon Democrat Rep. Peter DeFazio, introduced the Saving High-tech Innovators from Egregious Legal Disputes — or SHIELD Act, into the House this week. Utah Republican Rep. Jason Chaffetz co-sponsored the measure.

According to the lawmakers, if passed, HR 6245 would put the financial burden on so-called “patent trolls” that buy patents solely to sue companies that the patent holders claim violate the patents. Critics of patent troll tactics say that the patents are often out of date, inapplicable or rendered moot by “prior art” and should not have been granted. Bill backers cite support from consumer groups and venture capitalists.

Among other features, the legislation would be the first time Congress has defined the term “software patent,” which the text states is 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.”

CEA SVP Government and Regulatory Affairs Michael Petricone said: “The recent explosion of lawsuits brought by non-practicing entities, better known as ‘patent trolls,’ is a tax on technology and an anchor on our ability to compete internationally. Every dollar companies spend fighting baseless lawsuits is a dollar not spent on creating jobs and developing new products.”

He said the act is “is an important first step in bringing patent trolls under control.” 

Class action suits mainly benefit the lawyers involved, writes CEA President/CEO Gary Shapiro in a Forbes column titled “Legal Slime Chokes Best Companies.” Current patent laws allow “trolls,” which he defines as “faux companies that exist simply to sue other companies — to buy unused and otherwise worthless patents and extort payments from companies creating products and employing Americans.”

“Even a successful defense of a patent lawsuit costs upwards of a million dollars, so cash settlements to avoid the nuisance factor are significant,” according to Shapiro. These lawsuits increase consumer costs for products and stifle innovation, he adds asking rhetorically: “How did it become a good thing for businesses to be created simply to file lawsuits?”

The radio music automation patent dispute is now a year and a half old. Most recently we reported Mission Abstract Data/DigiMedia, which says it holds the patents, is pushing the judge in the case to lift a stay and move the case forward.

Even if the bill doesn’t pass, it will still be interesting to watch this issue unfold.

Music Automation Patent Dispute Gets NAB’s Attention