The protection of intellectual property is no less important for smaller companies than it is for larger ones, and the technology industry is one of the most competitive landscapes for emerging businesses that need to ensure their IP is secured. Startups have a unique challenge in the patent protection world; their IP is basically the kernel they must protect in order to germinate and grow their technology, but tech giants are so aggressive with their patent litigation that startups often can’t withstand the courtroom fees. Reports note that recent legislation brought through the U.S. Congress attempts to address the problems that have made patent protection imbalanced in favor of large corporations. 

The Innovation Act — recently passed by the House of Representatives — and similar reform bills, aim to curb the willy-nilly patent protection practices of businesses that seek to edge out smaller entities.

Fee-shifting is one of the expanded provisions of the Innovation Act that is a supposed key demotivating factor for patent trolls and other groups that are increasingly litigious. Fee-shifting — according to Forbes – could end up being a welcome respite for startups, but also make the IP protection process trickier and more expensive overall. 

Fee-shifting requires the non-prevailing party to cover the costs of litigation and other expenses of the prevailing party — a boon for startups with smaller bank rolls. But should the smaller group lose, and be required to cover the costs of the larger company. Thus, the startup might be more inclined to settle for licensing fees despite the chance that it could prevail in a patent lawsuit.

So — while the legislation aims at stemming the power of patent trolls — it could also deter smaller companies from actually taking larger groups to court for legitimate claims for fear that their pockets will be emptied. As the U.S. government muddles over the slew of patent reform legislation arriving at the floor, the consideration of the role of the startup must be a significant one. 


Further reading:

Patent trolls: The saga continues

Massachusetts Attorney General latest to take on patent trolls

When PAEs are not patent trolls