Judge (Ret.) Paul Michel’s commentary in The Federalist critiques the Litigation Transparency Act, a proposed law supported by over 120 large corporations that would impose strict disclosure requirements on funding sources for patent infringement lawsuits. He argues that this legislation would harm small inventors and startups by increasing litigation costs, prolonging proceedings, and giving deep-pocketed infringers an unfair advantage.
Key points from the article:
- Advantage to Infringers: The legislation benefits wealthy corporations accused of infringement, enabling them to exploit disclosure rules to intimidate and outlast smaller opponents in court.
- Predatory Practices: Many large corporations engage in “efficient infringement,” knowingly violating patents and treating damages as a business expense. This practice often forces inventors to accept inadequate settlements or abandon their claims.
- Importance of Third-Party Funding: Outside funding is a lifeline for smaller entities, helping them challenge powerful infringers. Mandatory disclosure would deter such funding by exposing investors to harassment and discouraging their participation.
- Existing Legal Protections: Michel emphasizes that current court rules already provide tools to address potential conflicts of interest, rendering the proposed disclosure requirements unnecessary. Courts have shown they can balance transparency with protecting sensitive information.
America’s startups and small businesses are facing unprecedented attacks on their intellectual property. Rather than taking the proper steps to legally license patent rights on their product, some wealthy corporations are simply appropriating the patented technologies they want.
Michel concludes that the Litigation Transparency Act, despite claims of promoting fairness, would deepen existing inequities in the patent system and undermine the ability of small innovators to protect their intellectual property.