Our Issues
Legal Reform
TechNet was founded following the technology industries’ 1996 defeat of Proposition 211, a California ballot initiative that would have made technology companies vulnerable to meritless class action lawsuits. Since then, TechNet has become the preeminent organization representing chief executive officers of the nation’s high technology companies and a leading voice for legal reform efforts to end meritless lawsuits that are a drain on resources and innovation.
TechNet has achieved the following important legal reform victories:
- President Bush and the Congress took a major step toward improving our nation’s legal system by enacting the Class Action Fairness Act in February 2005. This legislation will facilitate removal of class action cases from state to federal court, ensuring a more balanced resolution to major national class action lawsuits. The Act also includes important protections to ensure that class action settlements are fair to plaintiffs.
- The Private Securities Litigation Reform Act was enacted in 1995. This balanced package of reforms addressed serious abuses of the litigation system in which plaintiffs’ lawyers brought strike suits against technology companies whose stock price fell for any reason. Most of these cases settled with token payments for shareholders and enormous fees for lawyers.
- The Securities Litigation Uniform Standards Act was enacted in 1998 to prevent evasion of the federal securities laws and requirements of the PSLRA. By providing that class actions involving nationally traded securities be brought in federal court where they traditionally have been heard, the Uniform Standards Act plugged a loophole that existed following enactment of the PSLRA.
In 2006, TechNet adopted patent litigation reform as a policy priority. TechNet will support litigation reform proposals with the goal of ending abusive lawsuits brought by plaintiffs using patents as a means of obtaining settlements from legitimate technology businesses. Such proposals may include:
- Clear standards for forum selection that curtail the ability of plaintiffs to file infringement actions in "magnet" jurisdictions
- Reforms that direct courts to calculate the royalty or damages awards based on consideration of the proportionate value of the patentee's contribution to the product in question rather than on the full value of the entire product
- Provisions of current law that have been interpreted to permit the recovery of worldwide damages in U.S. courts; and
- Standards governing awards of multiple damages for willfulness
- Additional reforms, as necessary, to curtail practices that are a drain on innovation.
TechNet supports rational improvements to the litigation system that address abusive patent lawsuits, consistent with TechNet's longstanding leadership on litigation and tort reform policy.
Frivolous litigation costs the U.S. economy $200 billion a year and is a tremendous drain on resources that should be focused on innovation, not on meritless lawsuits. TechNet will continue to champion legal reform initiatives that strengthen our nation’s global competitiveness and technology leadership.
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