Patent Reform in 2016, Maybe Not as Dead as you Think

capitol-flag-335Conventional wisdom within much of the patent community is that patent reform is dead, at least for the 114th Congress. There is no way that patent reform, which famously stalled in 2015, could possibly restart and gain any momentum in 2016, right? After all, this is an election year, but not just any ordinary election year. This marks the final year of the Obama Administration, at least 14 major candidates are running for President, and the Republicans and Democrats couldn’t be farther apart on just about every issue. Patent reform is dead.

Not so fast!

Yes, President Obama is a lame duck and it will become increasingly difficult for anything of substance to be accomplished in Washington, DC. Unfortunately for the patent community, despite the hyper partisan times in which we live, patents, patent reform and innovation policy are not political issues. Patents and innovation policy will not drive voters to or away from the polls, and supporters seem not to care if a candidate takes positions they completely disagree with on patent matters. In short, patent and innovation policy presents no risk for politicians, but well-financed donors and lobbyists covet more reform, which makes for a dangerous combination.

Yes, there are a number of Constitutional conservatives, such as Republican Presidential Candidate and former U.S. Senator Rick Santorum and conservative commentator Ken Blackwell, both who have vocally made patents a property rights issue (see here and here). But so far even Republican Presidential Candidate Senator Ted Cruz (R-TX), a staunch Constitutional conservative, has yet to go on record equating patents to a Constitutional property rights issue, although he did vote against the PATENT Act in the Senate Judiciary Committee. Still further, some of the major proponents of additional patent reform are Republicans, including Senator Chuck Grassley (R-IA), Congressman Bob Goodlatte (R-VA) and Congressman Darrell Issa (R-CA), all of whom find themselves interestingly in alignment with the Obama Administration and the Obama Administration’s chief benefactor, the company formerly known as Google.


None of this means that patent reform will move from the pile of bills hopelessly stalled and to the floor of the House or Senate for a vote. The one thing to keep in mind, however, is that both the Innovation Act and the PATENT Act have passed through Committee and are awaiting floor action. That means that they could be taken up at nearly any time. So if and when momentum for reform is to be rekindled things could move fast – very fast.

Presently, the pharmaceutical and biotechnology industries are singularly focused on reforming the post grant process at the United States Patent and Trademark Office. The pharma/bio lobby is seeking a legislative fix that would exempt the patents they own from post grant challenges at the Patent Trial and Appeal Board (PTAB). The chances that such a carve out will be achieved is slim to none, with slim being an overly optimistic assessment, at least at the moment. But the situation is fluid, and the pharma/bio lobby has been thoroughly kicked in the teeth throughout the Obama Administration, both in the halls of the Capitol and in the courts. They see this issue as extremely important, perhaps an existential threat, and it is well known that if they are able to win the carve out they will support whatever reform it must be attached to regardless of how bad they may otherwise think the rest of the reform package may be. As long as the pharmaceutical and biotechnology industry remains against patent reform nothing will happen, but the forces that want additional reform will almost certainly see this final year of the Obama Administration as the last best chance to get truly sweeping patent reform for the foreseeable future. If desperation sets in, and Congress wants to accomplish something that neither party will view as political on an issue that will not upset voters, patent reform could once again gain momentum during 2016.

It is also important to keep in mind that Senator Grassley, who is up for reelection himself in 2016, is barnstorming Iowa in one of his now famous swings through every part of the state. During these campaign trips Grassley is telling Iowans that patent reform is among his top three legislative priorities for 2016. Given his seniority and the fact that he is Chair of the Senate Judiciary Committee, if Grassley is truly behind patent reform and willing to use his considerable clout in the Senate the issue is far from dead. This is true particularly true given the collective pressure that could come to bear from Senator Chuck Schumer (D-NY), Senator Patrick Leahy (D-VT) and Senator John Cornyn (R-TX), all who are supportive of additional patent reform efforts.

While some powerful Senators remain in favor of patent reform that does not mean that patent reform won’t be opposed in the Senate. Surprisingly perhaps, the strongest opposition to patent reform in the Senate has come from Senator Chris Coons (D-DE), author of the STRONG Patents Act, which offers a very different, pro-patent alternative view. Sharing the Coon’s view is Senator Dick Durbin (D-IL), himself a senior and respected member of the Senate who could decide to put his clout behind efforts to keep the legislation at bay. Of course, the wildcard in the Senate will be Senator Cruz, who has opposed patent reform and would undoubtedly be pushed by conservatives to stand up to an Obama Administrative initiative that undercuts innovator property rights. If patent reform does heat up and Cruz is pushed to take more forceful positions that would likely push other Republican Presidential candidates to take positions on the matter themselves.

As interesting as the Senate may become when patent reform resurfaces, the dynamic in the House will be fascinating for many reasons. Since patent reform stalled there is a new Speaker of the House, Paul Ryan (R-WI). Speaker Ryan has said he plans to return the House to regular order and allow business to trickle up from members to the full House rather than have legislation forced down from leadership on Members. It is widely known that Goodlatte and Issa continue to want more patent reform and are seeking opportunities to push forward to a vote in the House. Will Speaker Ryan allow the Innovation Act to come to a vote in the House? No one seems to know for sure.

While Ryan’s view of patent reform is not generally known, what is known is that House Majority Leader Kevin McCarthy (R-CA) is opposed to patent reform, or at least the patent reforms embodied in the Innovation Act. McCarthy has been listening to a group of venture capitalists from Silicon Valley who he has known for years and who’s opinions he values. These particular VCs, like so many others, will invest in technology companies only if there is a patent strategy in place to protect their investments. They have told McCarthy that the Innovation Act would be a disaster and McCarthy believes them. McCarthy told Goodlatte last year that more work had to be done and that the Innovation Act was not going to the floor, which is why it stalled in the House. But that was before Speaker Boehner retired, and before McCarthy became politically wounded to whatever extent he was as he himself sought to move up to the Speaker’s chair.

What all this means is patent reform may not be as dead as you previously thought. Patent reform will certainly resurface in 2016, with supporters in the House and Senate seriously and sincerely looking for ways to push the bills forward.


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13 comments so far.

  • [Avatar for Edward Heller]
    Edward Heller
    January 13, 2016 07:47 pm

    Gene, I know you have great affection for IBM from many of the statements you have made over the years. IBM, to say the least, has always valued patents. But they also, I believe, favor IPRs like most major companies outside of bio/pharma.

    Is it possible that you could simply ask them, as a friend, to consider that IPRs are wrong in that they allow collateral attacks, lower the burden of proof, and use BRI such that the value of a patent, and the reliability of a patent to actually protect one’s business if investments are at issue, is being permanently reduced. If IBM switches sides and joins the fight against IPRs, we still might save the day.

  • [Avatar for Edward Heller]
    Edward Heller
    January 13, 2016 06:26 pm

    Gene, Bio/Pharma, and might I add, every other type of inventor who needs patents for their business and that especially includes universities and startups, see IPRs as the greatest threat to the patent system there is. Guys like Phil Johnson are going for tweaks here and there, trying to make IPRs less bad. But they are not succeeding.

    The effort has to be made to repeal IPRs entirely as a gigantic error; and, while there is still time, everybody who has a problem with IPRs needs to get behind the constitutional challenges and support them. Congress may never be convinced to repeal IPRs given their support by big international businesses other than bio/pharma. The only remaining hope is the Supreme Court.

  • [Avatar for Ken]
    January 11, 2016 03:33 pm

    “how can suing on a patent (which is presumed valid) be considered frivolous?”

    This is an excellent point. However, it should be noted that it only applies to the “validity” aspect of a given case, as there could nevertheless be cases where it’s frivolous to suggest that a given defendant’s behavior infringes a given patent.

    But yes, in light of legally-presumed validity, that aspect is conclusively and per se ALWAYS non-frivolous.

  • [Avatar for step back]
    step back
    January 11, 2016 02:39 pm

    Curious @#9

    Not buried at my lill’ ole blog site

    Talk about putting chilling effects on inventors/ patent holders asserting their statutorily given property rights!

    See puttin’ inventor rights on ice

  • [Avatar for Curious]
    January 11, 2016 12:34 pm

    It is off-topic, but the link to the ED Texas discussion is buried. I just saw that Judge Gilstrap issued a Memo granting a motion for Attorney’s fees after finding the case to be “exceptional” and that the plaintiff initiated a frivolous lawsuit because they sued under US Patent No. 6,266,674. Apparently, Judge Gilstrap issued a motion invalidating that patent under 35 USC 101 and referred to some of the analysis in the memo.

    If anybody thinks that the ED Texas is “friendly” to patents, they just need to take a look at this opinion. First, the conclusion that claim was directed to an “abstract idea” is based upon a flawed analysis (albeit consistent with a lot of the dreck coming out of the district courts). The judge argues that the claim doesn’t require this be done by a computer. That point aside, it is plainly clear, to one of ordinary skill in the art, that the claim is directed to methodology performed within a computer. Moreover, even if it wasn’t performed in a computer, it wouldn’t be performed in the human mind but with some form of a tangible data structure.

    Second, how can suing on a patent (which is presumed valid) be considered frivolous?

    FYI … the case name is eDekka LLC v

  • [Avatar for Night Writer]
    Night Writer
    January 11, 2016 07:52 am

    You know a lot of what Google has done was really criminal. Google colluding with other Silicon Valley companies not to hire each other’s employees should have landed the founders of Google in prison for about 7 years.

    The only way to win this war is to get the public to see “patent reforms” as an attempt to strengthen the monopolies of the big corporations. The first order of business is probably lobbying to get the DOJ to break-up Google. Google is a monopoly in the search market which is huge for the ad revenue it brings in. It would be as if there was only one paper in each city all owned by the same company. We need to get the public to see these actions by Google as ones that are to further their monopoly. There is direct evidence of this as the Google founders said basically their biggest fear of loosing their business was innovation from another company like a small start-up. They said that in 2011, which I am sure their lawyers would never let them say now.

  • [Avatar for Night Writer]
    Night Writer
    January 11, 2016 07:45 am

    At the end of day, we can all yap all we want, but K Street is getting its millions each year from Google and the others to burn the patent system down. As long as that goes on with our current political funding structure, we are going to continually loose ground. Seriously, just think abut Obama. He said patent trolls were one of the worst problems the US had when the OMB said there was no problem. And, Obama was willing to stack the Fed. Cir. and the PTO to get that troll problem under control. Just think that this is going on when the great innovation engine the world has ever known is going full speed. In fact the greatest threat to the innovation engine is without question Google with their monopoly pricing of ads and their massive spending to get legislation to favor their continued dominance.

  • [Avatar for step back]
    step back
    January 10, 2016 06:11 pm

    Anon @#4

    Spot on.

    The day belongs to them who win the war of words.
    And guess what? They won.

    1) They got us to say “innovation” in place of invention.
    2) They got us to say “troll” in place of owner of a Constitutionally recognized property right.
    3) They got us to say “something more” and less “abstract” in place of ANY new and useful machine, process, manufacture, composition of matter, or improvement thereof.
    4) They got us to say “non-practicing entity” (NPE) in place of almost every inventor who cannot on his or her own bring into full fledged commercial practice embodiments of their inventions because they do not personally have the financial and other wherewithal’s to make it so by simply having an idea, locating Justice Merlin Kennedy’s 2nd year engineering sorcerer’s apprentice and uttering the magic incantation of ‘apply it’ (over the weekend on a geriatric computer).
    5) They got us to say “software is maths” and E=mc^2 is fundamental law handed down by Mother Nature herself in place of we really don’t know and are still exploring and learning.
    6) They got us to say “SCOTUS is supreme” in place of gee, maybe the Emperor wears no clothes.

  • [Avatar for Anon]
    January 10, 2016 12:42 pm

    and it is well known that if they are able to win the carve out they will support whatever reform it must be attached to regardless of how bad they may otherwise think the rest of the reform package may be.

    The very real danger of caving in to the “divide and conquer” motif…

  • [Avatar for Anon]
    January 10, 2016 11:31 am

    ** In a separate message, I wanted to note that the word “promote’ itself is often “victim” to the machinations of large multi-national corporations.

    As used in the constitution,the word does NOT mean only “to improve,” but also – and equally – has the meaning of “to spread” as in an advertising promotion.

    One of the “talking points” is that patents should only be rewarded for (what amounts to) Flashes of Genius, or breakthrough items that radically change the state of the art.

    But that was never the intent of “promote.”

    Further, innovation itself is not actually linear – there is NO such thing as a straight line of “get better.”

    Why do I tie this to large corporations? Because it is in large corporations that the duality exists that such corporations CAN compete directly far better on non-innovation modes, as well as be the ones to fund the higher cost merely linear innovation that a model of “promote only means linearly better” entails. It is this type of established large scale beast that the desire to forestall and remove other’s innovations that threaten the money machine overcome the rewards of innovation.

    On another recent thread we had the (errant) supposition that these other types of competitive factors are on par (or should be thought of in the same manner) as innovation. But such is not so. And while there can be innovation in marketing techniques (and other business methods) that SHOULD be rewarded – it is NOT in such innovations that the power that large corporations will typically wield and that are a threat to real innovation efforts. Again, when the entity has characteristics that naturally give rise to the (objectively reasonable) expectation that it is better (for the entity that is not attached to any one sovereign) to squelch the innovation of other’s and weaken patent systems which have been shown to work with strong patent rights.

  • [Avatar for Anon]
    January 10, 2016 11:17 am

    In the larger scope of “things at play,” the power of the corporation is indeed a critical aspect.

    Multi-national corporations, being a thing unto itself, has an identity and characteristics that truly transcend the characteristics of ordinary citizens that many laws – and especially the types of laws that seek to reward and promote** innovation in the many paths that innovation may take.

    Laws in the IP sphere can operate at the corporation level. Night Writer correctly alludes to one such form of law: tax breaks.

    More traditional types of IP law also can be “used” by corporations in the same vein as use by individuals.

    But the differences between corporations and individuals is an area that merits careful attention – especially when it comes to the evolution of law, what powers are shaping the evolving law, and how the balance of benefits develops.

    Patent law is certainly not the first area of law to succumb to “agency capture” (think of the savings and loan debacle, of the [near repeat] of the big bank bailout).

    How to stop this? Diligence of course. But sadly that may not be enough. I was one of many attorneys that I know that actively reached out to Congress during the AIA passage, advising of the (many) dangers in that bill (now law). But again, we have signs of a systematic capture (think Citizen’s United).

    One of the differences between multi-national corporations and indiviudals which is pertinent to IP law is that citizens by and large are typically citizens of one country, and citizen’s actions tend to benefit that one country. IP law by its nature is sovereign specific. By this, I mean that IP law – at its heart – is meant to benefit the specific sovereign itself. Comity and nation to nation respect does extend the benefits, but those benefits remain geared to what is best for any one sovereign.

    Multi-national corporations fundamentally change that critical aspect of IP law. Multi-national corporations, unlike real people, owe NO allegiance to any one sovereign and at point, owe allegiance to NO sovereign. The only allegiance is to themselves. When real people act in a manner solely for themselves (in the Adam Smith Invisible Hand mode), the natural constraint of that person being in and of a sovereign is what yields the ultimate benefit for the sovereign. When you strip out this underlying mechanism and have an entity divorced from what ultimately is the sovereign, you end up with perversity and decay of the sovereign.

    Our founding fathers were rightly suspicious and cautious of entities such as corporations. While there are definite benefits of such entities, we should NOT forget that there are real dangers also associated with such, especially when it comes to money and power.

  • [Avatar for Paul Morinville]
    Paul Morinville
    January 10, 2016 11:03 am

    Night, You are right about international corporations. Multinationals don’t want any peon to challenge their company. They could lose their money and power machine.

    The only way to stop this is to raise hell with your lawmakers in Congress, your local newspapers, your local Republican and Democratic parties, TEA parties and other political groups, post on social media and make it a talking point everywhere.

    Changing how the issue is framed to tax breaks is a good idea, but high volume, loud complaints is what is truly needed right now.

  • [Avatar for Night Writer]
    Night Writer
    January 10, 2016 10:30 am

    The sad thing is that this isn’t going to end until the international corporation get what they want. We in the patent community put enormous amount of work into heading off these crippling “reforms,” but to the big international corporations (e.g., Google) $20 million in money for K Street is nothing. The flow of money will continue. The only hope to stop this is to attribute this properly to “reforms” that are like tax breaks for the large corporations.

    Otherwise, the future is bleak.