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House panel passes bill targeting 'patent trolls'

A Google trademark is reflected in Apple logo in this photo illustration taken in Berlin, August 31, 2012. REUTERS/Pawel Kopczynski
A Google trademark is reflected in Apple logo in this photo illustration taken in Berlin, August 31, 2012. REUTERS/Pawel Kopczynski

WASHINGTON (Reuters) - A U.S. congressional panel on Wednesday approved a bill targeting patent "trolls," companies that buy or license patents from others and then aggressively pursue licensing fees or file infringement lawsuits.

The House of Representatives Judiciary Committee voted 33-5 to send to the full House a measure that appeared to have the best chance of reining in patent assertion entities, known derisively as "trolls."

The White House in June urged Congress to take steps to curb abusive patent lawsuits that have sprung up in recent years, particularly in the technology sector.

The patent reform bill, introduced by Representative Robert Goodlatte, was approved after Goodlatte stripped out a measure that would have changed how the U.S. Patent and Trademark Office reviews software patents to determine if they are valid.

The bill aims to fight frivolous patent litigation. In one case, a patent assertion entity, or PAE, demanded licensing payments from retailers who provided services to customers such as free Wi-Fi.

"Within the past couple of years we have seen an exponential increase in the use of weak or poorly granted patents against American businesses with the hopes of securing a quick payday," said Goodlatte, a Virginia Republican, who chairs the committee.

"These suits target a settlement just under what it would cost for litigation, knowing that these businesses will want to avoid costly litigation and probably pay up," Goodlatte said at the committee session in which the bill was approved.

The bill requires judges hearing patent cases to award fees to the winner in an infringement lawsuit, unless the judge decides otherwise. The bill would also require companies filing infringement lawsuits to provide specific details on what patent is infringed and how it is used.

Goodlatte has worked on the patent issue with his counterpart on the Senate Judiciary Committee, Vermont Democrat Patrick Leahy.

Leahy, along with Senator Mike Lee, a Republican from Utah, launched a bill on Monday that would require patent holders to disclose ownership when they sue and would allow manufacturers to step into lawsuits to protect customers accused of infringing.

While similar in some respects, the House and Senate bills also have significant differences that would need to be ironed out by lawmakers if each is passed.

Other proposals are circulating on Capitol Hill, and the Federal Trade Commission has a study underway on the impact on competition of abusive patent litigation.

Patent experts such as Adam Mossoff, who teaches at George Mason University School of Law, have urged Congress to be cautious in changing patent law because of the danger of hurting companies whose patents are genuinely infringed.

Internet companies largely support the Goodlatte bill, and the effort is backed by Cisco Systems Inc, Apple Inc, Google Inc and other technology powerhouses.

To read the text of H.R. 3309, Goodlatte's "Innovation Act," see http://www.gpo.gov/fdsys/pkg/BILLS-113hr3309ih/pdf/BILLS-113hr3309ih.pdf

(Reporting by Diane Bartz; Editing by Ros Krasny, David Gregorio and Eric Beech)

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