That's good, but the pessimist in me thinks IV could probably find a way around this too, but maybe not. Modifying the law to somehow identify patent troll originators (IV) and barring them from disbursing patents to NPEs would seem like some added protection.
If NPEs are barred from litigating patents, there's nothing to stop those large companies from saying "great, we're going to use this... but not pay you anything, because there's nothing you can do about it".
The big company usually pays when they don't want to produce it.
Otherwise, they just do it and wait for the lawyers (who are not going to come)
Also, it's easier for them to come up with a way of not infringing the patent in the first place.
Even if it's "original inventor and heirs", you've created a liquidity process -- if you're a chemist with lung cancer, it would be great if you could sell your novel synthesis in order to pay for your cancer treatments rather than needing to start selling drugs yourself.
And then there's the problem of defining what a "practicing" entity is, of course. Someone who has at least one customer? Someone who has used the invention themselves? Someone who was planning on building a product, but didn't get into YC and ended up working at Microsoft instead while he tries to license his invention to raise money to pay for his next startup idea?
I don't follow the chemist example. The patent is still valuable to companies who do want to productize it, or even companies that don't. Companies can still buy and hold patents without doing anything with them, it's just that they are barred from litigating them. They can still resell the patent to someone else, potentially for a profit.
A "practicing" entity has either brought a product to market, or uses the invention themselves in the process of building a product on the market. Someone who is planning on building a product but has no funds doesn't get to litigate unless they are the original inventor. Your last example seems to imply that they are the original inventor.
The root of the problem is more closely related to the imbalance of power in a lawsuit: one party has the ability to subject another to great cost; with little or no cost to themselves, even if they are completely wrong. That imbalance is what makes extortion possible, and this bill seems to be more directly aimed at that problem.
To force the plaintiff to take on more responsibility, perhaps they could go further and require posting a bond for the cost of the trial in case they are wrong. That would prevent them from just setting up shell companies and then saying they can't pay when they lose. The judge can be involved in setting the bond amount, which should help sort out the rest of the problems and keep the incentives reasonable.
The chemist doesn't want to spend time going around to companies trying to license his technology, and he certainly doesn't want to spend years in litigation. He's busy dying (and/or cooking meth) -- he wants to sell his technology to a company which will do the licensing and/or litigating for him.
The ability to sell an asset is an important one for an efficient economy.
Why should patents be assignable or transferable anyway? The assignment or transfer of a patent necessarily implies the original holder isn't interested in the state-conferred monopoly that a patent is, and therefore he's not interested in having a monopoly on the invention the patent covers. To my mind, the assignment of a patent should immediately expire and/or invalidate it.
It means no such thing. The monopoly has value whether they go through with production themselves or sell it. Selling it just realizes the value in the short term rather than the long.
There is a middle ground, where a patent once transferred by the original patent holder cannot be extended, or is perhaps reduced, or the patent cannot be resold. Something of the sort. This would maintain the patent's value for the inventor in a market, as well as provide reasonable measure against patents being scooped up and plaguing IT for decades.
Better yet, though, no more software / algorithm patents.
But beyond that I'm really confused by your argument. You seem to think that someone files a patent because they hope to exclude people from its use, which is not what patents are intended to do at all. They are intended to allow an inventor to realize an incentivized value for the public disclosure of their invention.
To that end it doesn't matter when the value is realized, the inventor has done their part by disclosing the invention to the public.
Because the purpose of the patent system is to turn trade secrets into public assets. Bob the blacksmith's new alloy is not much of a public asset if for the first twenty years all we get are the few thousand horseshoes that Bob can hammer out. You are advocating a Chairman Mao patent system, with patents only benefiting garage semiconductor fabs and artisinal jet engine factories.
The transferability of patents allows them to immediately be deployed throughout society.
Another valuable example of this is a patent pool consortium, a corporation that exists to bring all patents in a field together for easy licensing.
"Reduce inventions to practice?" First, I don't think that my country has any such legalese in our patent law. Second, what does that make NVIDIA? Or ATI? They don't make their own chips either. Third, I believe that what is protected by most of these patents are neither HDL files nor the chips but rather specific implementation techniques for parts of the HDL implementation of the ISA. If the chips were patented, it would be worthless because you could do an independent design.