And now a return to a favorite topic here at AVC – patents, patent trolls, and the urgent need for patent reform here in the US.

One of my favorite ideas for sensible patent reform is "loser pays" for the legal costs of the other side.

The reality is that patent trolling is a low cost form of shakedown and that there isn't much economic cost on the troll to deter this behavior. If challenged in court, patent trolls win less than 25% of the time. And yet so few of these shakedowns ever go to court because the cases get settled for economic reasons (settlement cost are less than expected defense costs). And these settlements fund the trolls to keep shaking companies down. If the target company can recover their legal costs by defending themselves and winning, then the math over the settlement changes and more cases will be litigated, thus increasing the costs for the trolls.

This is where the SHIELD act comes in. There are so many things to like about this bill. It is only five pages long. It only does 1 1/2 things. The one thing is amend patent law to provide for loser pays. The 1/2 thing is it allows the court to require the troll to post a bond early on in the case to be sure they can and will pay the legal costs if they lose.

This is a bi-partisan piece of legislation being introduced by a representative from Oregon (Peter DeFazio – D) and a representative from Utah (Jason Chaffetz – R). In their press conference introducing the bill (embedded below), they say that the leadership is going to get moving on this bill quickly.

I think we should all help them by letting our representatives know we support this legislation. I just did that and it only took 15 seconds.