In an attempt to combat the growing proliferation of “patent trolls”, two U.S. congressmen have recently introduced a bipartisan bill that would make it significantly easier for a prevailing defendant in a patent infringement case to recover its attorneys’ fees from the plaintiff.  The Saving High-tech Innovators from Egregious Legal Disputes (“SHIELD”) Act seeks to provide for the recovery of litigation costs in certain cases where the court finds that the claimant did not have “a reasonable likelihood of succeeding.”

Patent trolls primarily operate by purchasing volumes of broad patents and using them as a sword—filing numerous infringement lawsuits targeting everyone from Fortune 500 companies to start-ups.  Litigation costs routinely run into the seven figures and cases often last two to three years, a burden most young tech companies simply cannot bear.  As Congressman Jason Chaffetz (R-Utah), co-sponsor of the bill, 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.”

So most defendants feel compelled to yield to the trolls’ demands of costly licensing fees or settlement payouts.  And, as the law currently stands, even if an accused patent infringer successfully wins at trial, it may only be awarded attorneys’ fees in an “exceptional case”, which effectively translates to almost never.  This allows patent trolls to threaten and file lawsuits claiming infringement, with no significant economic risk if their claim fails in court.  The SHIELD Act would drastically lower the standard required for courts to force unsuccessful plaintiffs to pay the wrongfully accused patent infringer’s attorneys’ fees.  In fact, many are already analogizing this system to the “loser pays” system adopted in England.

Clearly, the threat of having to cover the accused infringer’s hefty attorneys’ fees may serve as some deterrent to patent trolls who view filing large quantities of infringement lawsuits as a cheap, effective way to coerce defendants into paying settlements and licensing fees.  However, businesses should note that the SHIELD Act exclusively applies to computer software and hardware cases; threatened patent litigation against other alleged infringements is still subject to the “exceptional case” standard for awarding attorneys’ fees.  Thus, the SHIELD Act may only truly serve to force patent trolls to start targeting different technologies and business sectors.  Still, the fact that Congress recognizes that patent trolls have become not just a nuisance but legitimate threat to established businesses and start-ups alike and is actively taking action to combat this problem is a step in the right direction.

For the full text of the bill, click here.