Today, Congressman Jerrold Nadler (NY-10), Ranking Member of the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property and the Internet, voiced his support for the Innovation Act.

“The United States leads the world in innovation and creativity, and it is our strong patent system that helps fuel economic growth by enabling creators to protect and exploit their inventions,” said Congressman Nadler. “I support the Innovation Act because a strong patent system requires that we protect businesses and consumers from the harm caused by abusive litigation.  But I am mindful that, in addressing the patent troll problem, we must not impose too great a burden on legitimate plaintiffs.  A strong patent system also depends on inventors having the ability to protect their creations in court.”

Below is the full statement from Congressman Nadler, delivered in the House Judiciary Committee markup of the Innovation Act:

“Mr. Chairman, as an original cosponsor of the Innovation Act, I am pleased that we are moving this legislation forward today.  This is a good and balanced bill that I expect to become even better after passage of the Manager’s Amendment.

“The United States leads the world in innovation and creativity, and it is our strong patent system that helps fuel economic growth by enabling creators to protect and exploit their inventions.  But, the patent system has been turned on its head in recent years.  Instead of serving as a shield for inventors against those who would infringe on their intellectual property rights, it has been used increasingly as a sword by patent trolls, who file abusive and frivolous lawsuits against inventors.

“Patent trolls use litigation, or the threat of litigation, as a weapon to extort settlements from innocent defendants.  They generally own weak patents and make vague claims that will require expensive and time-consuming discovery on the part of the defendant.  Many patent trolls target end-users that have no knowledge or control over the alleged infringing product and little ability to mount a defense.

“Trolls seek to drive up the cost of litigation and force a defendant to determine that it makes more financial sense to settle even a totally spurious claim early, rather than to fully litigate a case and pay the exorbitant legal fees that may come with it.  Companies that refuse to give in to the patent trolls’ demands may be vindicated in court, but after spending what could be millions of dollars on their case, it is a somewhat hollow victory.  As a result, many businesses decide that defending their case is simply not worth it and they agree to a settlement.

“This is what the patent trolls are counting on.  This is their business model.  They do not invent new products that improve our lives.  They invent new methods to drive up litigation costs and prey on innocent defendants.

“Such abusive litigation threatens small and large businesses alike.  And, it’s not just businesses that should be concerned about these lawsuits.  Patent trolls harm consumers too.  That’s because every dollar spent fending off frivolous lawsuits is a dollar that cannot be spent on research and development, or on improving customer service.  We all have a stake in stopping this terrible practice.

“I support the “Innovation Act” because a strong patent system requires that we protect businesses and consumers from the harm caused by abusive litigation.  But, I am mindful that, in addressing the patent troll problem, we must not impose too great a burden on legitimate plaintiffs.  A strong patent system also depends on inventors having the ability to protect their creations in court.  We must be careful to ensure that the reforms included in this legislation do not have unintended consequences.  The Manager’s Amendment will make several helpful changes to address some of the concerns we have heard from stakeholders who believe that the bill may unduly restrict the rights of inventors.

“I should note, however, that I remain concerned about the loser pays provision in this bill.  People or businesses with legally legitimate disputes should not be punished for trying to protect their interests in court.  H.R. 9 attempts to strike a balance that will deter patent trolls from filing frivolous suits while protecting those with reasonable, but ultimately unsuccessful, claims.  This provision is at the outer edge of what I can support and I hope it can be improved as we continue to work on this legislation.

“I was pleased to see that the PATENT Act, which passed the Senate Judiciary Committee last week, includes a fee shifting provision that, while not perfect, moves in the right direction.  As we work to reconcile our bill with the Senate, we should retain and refine their language even further.

“On balance, however, this is good legislation that deserves our support.  I want to thank Chairman Goodlatte for crafting the “Innovation Act” and I look forward to continuing to work with him toward a finished product that will both deter abusive patent litigation and protect the rights of inventors.

“Thank you and I yield back the balance of my time.”