“Without the ability for a patent owner to obtain an injunction, attorneys for infringers commit malpractice if they advise taking a license.”
Senator Chris Coons (D-DE) and Congressman Steve Stivers (R-OH) reintroduced the STRONGER Patents Act of 2019 today in an event on Capitol Hill. Coons first introduced the STRONG Patents Act in 2015, which then became the STRONGER Patents Act in 2017. This latest iteration, like the iterations before, seeks to take a number of steps to strengthen patent protections and promote American innovation. Coons, Stivers, Representative Mazie Hirono (D-HI) and Representative Bill Foster (D-IL) gave remarks today, followed by a number of industry, inventor, business and university representatives who support the legislation. The bill is also being co-sponsored by Senator Tom Cotton (R-AR). Both Coons and Foster noted the “huge ideological spectrum” represented by the various members of Congress who are supporting the bill.
“The STRONGER Patents Act recognizes the critical nature of the patent system and will help reverse a troubling trend of legislation and litigation that has weakened it over the past decade,” said The Alliance of U.S. Startups and Inventors for Jobs (USIJ) Executive Director Chris Israel in a statement issued earlier today. “The STRONGER Patents Act will make pragmatic and impactful improvements to U.S. patent law that will increase innovation, spur investment, protect U.S. intellectual property and make American more competitive.”
Innovation Alliance Executive Director Brian Pomper also issued a statement noting there has been an “alarming decline” in the U.S. patent system in recent years and that “the STRONGER Patents Act takes critical steps to strengthen patent protections and promote American innovation and job creation.”
I agree with them, and hope that the third time is the charm for Senator Coons.
Bye Bye, eBay
While there have been several changes from previous iterations of the bill, perhaps the most important provision contained within the bill has been retained; that provision relates to injunctions for victorious patent owners who have proved infringement and who have also withstood all validity and other challenges to their patents.
Section 106, titled “Restoration of Patents as Property Rights”, would amend Title 35 to add a new 35 U.S.C. 283(b), and would restore the presumption of injunctive relief upon a finding that a patent is both valid and infringed. The language in the STRONGER Patents Act of 2019 reads:
(b) INJUNCTION — Upon a finding by a court of infringement of a patent not proven invalid or unenforceable, the court shall presume that— (1) further infringement of the patent would cause irreparable injury; and (2) remedies available at law are inadequate to compensate for that injury.
If enacted, this provision would essentially overrule the U.S. Supreme Court’s decision in eBay v. MercExchange, 547 U.S. 388 (2006). In eBay, the Supreme Court ruled that the presumption that an injunction should issue to a victorious patent owner was inappropriate and that courts needed to apply the familiar four-part injunction test. This has led to permanent injunctions being overwhelmingly denied since eBay, which is ironic given that a patent is merely an exclusive right while an injunction, like the patent grant itself, is an order from a court to a defendant that has already lost that they must not engage in certain activities already prohibited by the patent grant.
The language of the STRONGER bill presumes that two prongs of that four-factor test weigh in favor of the victorious patent owner.
In a truly Dilbertesque manner, after eBay a patent owner has an exclusive right up until the point they have prevailed in litigation. Once they have prevailed in litigation against a defendant that has been adjudicated to infringe and having withstood all defenses, the patent owner no longer has an exclusive right because there is no entitlement to an injunction. And injunctions are typically denied.
Post-eBay, patent owners do not have the right to exclude, period. Without the ability to get an injunction, infringers have the right to use and continue using, and that means the U.S. patent system has been transformed into a compulsory licensing system. Patent owners are not in control. The tortfeasor infringer is the party in control. And without even the threat of an injunction, they have no incentive to license.
This is not how the law is supposed to work, and the STRONGER Patents Act would return much needed sanity and recognize that infringement causes irreparable damage and monetary damages are insufficient to compensate patent owners who are supposed to enjoy exclusivity. Indeed, the STRONGER bill Indeed, it would return patent law to fundamental principles of American law, which seeks to incentivize parties to resolve matters with arms-length negotiations and outside of the courts. The law is distorted and misstructured if parties are driven to the courts to resolve disputes because the law interferes with private resolution.
The Coase Theorem
The theory that law should maximize certainty and minimize transaction costs in order to facilitate an efficient, arms-length negotiation of rights is known as the Coase theorem. The Coase theorem is attributed to Nobel Laureate Ronald Coase. According to Coase, obstacles to bargaining and/or poorly defined property rights lead to an inefficient marketplace.
The wisdom of Coase can aptly be demonstrated by the current plight of the U.S. patent system. Prior to 2006, a victorious patent owner was typically the recipient of an injunction. That, of course, makes perfect sense since a patent is nothing more than an exclusive right that quite literally grants nothing more to the owner than the right to exclude others from making, using, selling, offering for sale or importing that which is claimed. Without the right to exclude, a patent is worthless. And without an injunction, infringers cannot be made to stop, so they don’t.
The disaster brought into being when a marketplace is gerrymandered to make arms-length negotiation impossible is something to behold. Instead of patents being a property right we have gone to patents being less than a paper tiger.
Restoring Sanity to the Patent System
Without the ability for a patent owner to obtain an injunction, attorneys for infringers commit malpractice if they advise taking a license. After all, patents can be challenged at the PTAB where many will fall. Those that survive can be litigated again in district court, and serially challenged by others at the PTAB. If the patent owner wins, there is always an appeal, and likely a retrial given the Federal Circuit reversal rate. If the patent owner wins monetary damages the award will be remitted (i.e., lowered) because the Federal Circuit never likes awarding 100 cents on the dollar to patent owners. Of course, all of this will take a decade and how many patent owners have the funds to fight for a decade? They will give up.
Taking a license is indeed malpractice when it is so easy to challenge patents, so easy to tie up patent owners indefinitely, so difficult to get adequate damages, and virtually impossible to get an injunction.
The law is supposed to maximize certainty and minimize transaction costs in order to facilitate an efficient, arms-length negotiation of rights. That is what keeps disputes out of court, or if they make it to court, it is what gets disputes to settle. eBay has so significantly tilted the playing field that arms-length negotiations of rights is impossible, which is why so many attorneys who represent infringers brag about simply throwing away, or circular filing, inquiry and notice letters they receive from patent owners. Infringers have no risk. They cannot be shut down.
The STRONGER Patents Act is an extremely important piece of legislation that would return sanity to the U.S. patent system. The most needed and important provision that would immediately return the system to an equilibrium between patent owners and infringers is overruling eBay, which is long overdue.
Join the Discussion
25 comments so far.
Martin NguyenAugust 28, 2019 12:27 pm
A friend of mine who currently works for a hi-tech and a public traded company once told me his company just “put in the trash” when they received infringement letters from inventors. This shows big companies have no respect for independent inventors.
LibertyAugust 28, 2019 11:03 am
NOT GOING TO HAPPEN;
According to Sen. Coons’s press release, the bill has the following bipartisan, bicameral support:
Chris Coons (D-Del.)
Tom Cotton (R-Ark.)
Dick Durbin (D-Ill.)
John Kennedy (R-La.)
Mazie Hirono (D-Hawaii)
Kevin Cramer (R-N.D.).
Steve Stivers (R-Ohio)
Bill Foster (D-Ill.)
Brian Babin (R-Tex.)
Michael Burgess (R-Tex.)
Warren Davidson (R-Oh.)
Scott Peters (D-Cali.)
Paul Gosar (R-Ariz.)
French Hill (R-Ark.)
Thomas Suozzi (D-N.Y.)
Bill Huizenga (R- Mich.)
Dave Joyce (R-Oh.)
Nydia Velazquez (D-N.Y.)
Peter King (R-N.Y.)
Ralph Norman (R-S.C.)
Bonnie Watson Coleman (D-N.J.)
Tom McClintock (R-(Cali.).
That’s an impressive number of supporters, but still a long way from a majority vote. FAANG spends to much money lobbying government to let a pro patent bill pass. Does not matter who the new President is. We are years away from seeing anything. Its better to file for a Patent in Europe or China, America is a grave yard for new inventors.
American CowboyJuly 14, 2019 11:53 am
Night, on most things, the R’s have the better position. But that is not always true with respect to patents. The antipatent view started its ascendancy in W’s administration.
Night WriterJuly 13, 2019 10:38 am
My guess is the reality is that the only hope for patents is if the R’s take the win back the House and keep the presidency and Senate. Then it might be possible to get real reform. Maybe Trump would do something like dissolve the CAFC and reform it the next day and not stack the court like Obama did.
AnonJuly 12, 2019 02:37 pm
angry dude @ 20,
Please kindly refrain from peddling the Efficient Infringer desire message of “don’t bother.”
Mr. DeLassus @ 2 (and in part, to the larger general readership, for reasons which shall be evident),
I invite you to reconsider both the substance and your “leaning” in the second of your evaluations per your “quick perusal.” I submit that you may want to read the excellent review at https://www.patentdocs.org/2019/07/the-stronger-patents-act-of-2019-weakening-post-grant-proceedings.html .
For the larger general readership, Mr. DeLassus has unfortunately degenerated into a “snipe-from-the-sidelines-but-not-engage” inte11ectual coward.
On occasion, he does offer some interesting views, but by his own choice, only engages in any meaningful discussion with those that are “ultra-polite” in the sense that no critical evaluation of Mr. DeLassus’s position is provided.
He would rather (and merely) snipe with “We have seen so far a lot of (for lack of a better word) “silly” constitutional challenges” while NOT actually engaging on the merits of those “silly” challenges. This makes Mr. DeLassus the silly one, and his points (when pertinent) more likely to be dismissed. His “tactic” is exceptionally closed-minded, and thus, the diminishment of his views is deserved. It may be thought of that any “decent” or cogent view that he may express may be one that he has accidently stumbled upon, rather than one that has been developed through rigorous and critical thinking.
angry dudeJuly 12, 2019 01:55 pm
too little, waaaaay too late
The doc said “to the morgue” – to the morgue it is!
BJuly 11, 2019 11:09 pm
@ David Salk “I hope that the 101 (Alice Issues) are either part of this bill, or soon follow.”
I intend on making a trip to both Senator Tillis’ and Senator Coons’ office in the next couple of weeks. I’ll report on what I hear.
AnonJuly 11, 2019 06:34 pm
Without a doubt or moment’s hesitation, the answer is that an injunction is better.
JamJuly 11, 2019 05:48 pm
Which would be better (assuming the courts would enforce it):
1) an injunction, or
2) no injunction, but treble damages and treble patentee’s attorney fees for all relevant court proceedings shall be paid by the infringer to the patentee.
AnonJuly 11, 2019 05:15 pm
Excellently written article, Gene. Bravo.
Martin NguyenJuly 11, 2019 02:51 pm
For independent inventors, like me, the least we can do now I think is to send these two gentlemen a thank you note for showing our appreciations and to support them.
Carrie HafemanJuly 11, 2019 11:54 am
When will it be introduced? And when would they vote?
Night WriterJuly 11, 2019 11:16 am
🙂 I think that is definitely going on.
American CowboyJuly 11, 2019 07:35 am
Scouts is generally anti-Coase when it comes to patents. Howard Markey’s CAFC sought to create relatively bright-line rules for topics like obviousness (reaching, suggestion or motivation) and subject matter eligibility (machine or transformation), but scotus stepped in and, at best, fuzzied up those tests, usually to the detriment patentees. Same with denying injunctions to winning patentees.
David SalkJuly 11, 2019 02:08 am
I hope that the 101 (Alice Issues) are either part of this bill, or soon follow.
Paul ColeJuly 11, 2019 01:48 am
A very helpful bill which deserves support.
But as an English commentator I am puzzled by the effects of eBay. Injunctions are a remedy founded in equity both in the US and in the UK and the relevant principles are much the same. The word “may” in the US statute indicates that grant of an injunction is discretionary in the US as it is also in the UK.
Nevertheless in UK grant of an injunction is the norm which is deviated from only for good reason (e.g. in medicine that grant of an injunction would harm patients). It appears that eBay has changed this position in the US greatly to the disadvantage of patent owners. It is interesting to ask why? Is it a question of inappropriate and unintended gold-plating as we have seen under Section 101?
Jeff HardinJuly 11, 2019 12:48 am
This is a step in the right direction, but in order to gain support of inventors, the STRONGER Patents Act should also incorporate the provisions below:
– Venue Reform.
As a result of TC Heartland, an inventor who wishes to enforce her patent rights against an infringer does not have a convenient venue to do so. She did nothing wrong, yet now her work on innovation must halt while she spends the additional time and cost to traverse the United States to infringer-friendly district courts to enforce her rights against theft. The solution to this can be found in the proposed Section 1400(b)(4) of S.2733 of the 114th Congress—the Venue Equity and Non-Uniformity Elimination (VENUE) Act of 2016, legislation that was tabled given that TC Heartland was underway. Now the pendulum in full swing in favor of an infringer as a result of TC Heartland, a provision like that found in S.2733 would amend Section 1400(b), allowing an infringement action to be brought in judicial districts “where an inventor named on the patent in suit conducted research or development that led to the application for the patent in suit”. This would allow an inventor to more conveniently enforce her patent rights in the judicial district where she conducted her research; moreover, this language of this bill does not allow bad actors to participate in forum shopping. If Congress wants to promote Science and the Useful Arts among the Inventors listed in the Patent Clause of the Constitution, Congress should incorporate this very venue reform.
– Inventor Consent for PTAB Proceeding & Declaratory Judgement Venue.
Plain and simple, inventors cannot receive contingency fee representation at the PTAB — there is no monetary damages award, so no attorney or firm will take such a challenge at the Patent Office on contingency. Thus, this Act needs to include a provision where, prior to a PTAB proceeding on a patent owned solely by original inventor(s), the inventor must provide consent to such proceeding. Failing such consent, patent challenges for patents held by inventors can be made in district court, where an inventor can receive contingency fee representation. Again, the inventor did nothing wrong here, so why should she be penalized at her own cost in order to see if the government made a mistake? She was issued a patent that has already been vetted by experts in the field. A PTAB proceeding is alarming for inventors and serves as a risk to pursing the patent bargain, when, according to the 2017 AIPLA Report on the Economic Survey, the average cost for a post grant review runs at $450,000.00. Correcting this unintended consequence of the AIA would allow an inventor to obtain the same end result — that is, determining patent validity — as can be done in a district court, while enjoying the benefit of receiving appropriate representation to enforce her rights; moreover, this would not allow bad actors to file frivolous lawsuits, as inventors listed on the face of patents are the inventors — they are not the supposed “bad actors” that is preached about by the efficient infringer lobby.
Furthermore, in accordance with the proposed venue reform regarding where research was conducted, claims for declaratory judgement relating to an inventor-owned patent should also be limited to the district where the inventor is domiciled or has consented to jurisdiction. If Congress wants to promote Science and the Useful Arts among the Inventors listed in the Patent Clause of the Constitution, Congress should incorporate this very PTAB consent and declaratory judgement venue reform.
– Abolish Retroactive Application of the AIA.
I’ve said this before and I’ll say it again: No inventor who disclosed her invention prior to the enactment of the AIA entered into the patent bargain of the AIA. The Supreme Court in Oil States opted not to address retroactive application of IPRs on patents having priority dates that predate the AIA; nevertheless, the AIA provides that the USPTO can take a patent away from a patent holder by instituting an IPR on said patent. Moreover, such a taking by the Patent Office from inventors who disclosed their inventions prior to the AIA and who did not subject themselves to the provisions of its title is unjust, violates due process, and destroys any confidence in the social compact between inventors and the government, because, at any time, the government can change a legal contract ex post facto. Congress must restore integrity and confidence in the U.S. patent system. Abolishing retroactive application of the AIA on patents having priority dates that predate the law would restore confidence held by an inventor in her government and in the social compact patent bargain with the people, without fear that the government can unfairly change the rules in the middle of the game on a patent bargain already entered.
Greg DeLassusJuly 11, 2019 12:39 am
@1, This is separate from (i.e., in addition to) the §§100/101/112 reforms. Sen. Coons’ office have been introducing iterations of the “STRONG” Panent act (now become “STRONGER“) since 2015. I certainly hope that this is the year it makes it across the line, but this long antedates the effort at §101 reform.
CosmoJuly 10, 2019 11:25 pm
Best way to raise campaign funds:
Step 1 – get someone to introduce a bill that big companies with big funds will fight.
Step 2 – collect funds to “fight against it”
Step 3 – repeat
JPMJuly 10, 2019 10:41 pm
Let’s hope this passes.
RIP American Patent Rights.July 10, 2019 09:23 pm
Mr. Quinn there is zero chance Coons bill will go through. Silicon Valley is making to much money stealing patents and are using some of that cash to buy up dem. rep. To keep the money train flowing. America has entered a Corporatocracy the only hope an inventor has is filing for a patent in Germany and China where injunctions still apply and where Silicon Valley has not bought everything politician.
CorporatocracyJuly 10, 2019 08:29 pm
What Silicon Valley wants Silicon Valley gets, a new loophole is in the works to keep patent injections off the table, special interest groups are work on 100 112 to keep patents weak so they can continue their theft and keep inventors patents weak. No chance Congress will defeat FAANG as most Democrats and Republicans collect millions in donations from these companies and are obligated to serve corporations first. This bill will get squashed like it has been in the past.
Pro SayJuly 10, 2019 08:09 pm
Big Tech — especially FAANG and their innovation-stealing, great-new-jobs-killing, small company crushing, America-Be-Damned cabal begins their howling and screaming over this fairness-restoring bill in the halls of Congress . . . first thing tomorrow morning.
Please Congress, stand strong.
America and American innovation are depending on you.
Greg DeLassusJuly 10, 2019 07:39 pm
I cannot pretend to have read this text in as much detail as it deserves, but I want to call out two excellent provisions that I see in my quick perusal:
(1) Reversing Ebay. Ebay totally upended the very logic of why one has a patent system in the first place. It is a shame that it requires Congressional action to restore what should be common sense, but I nevertheless tip my hat to Sen. Coons and his fellows for this welcome dose of common sense.
(2) Clear-&-convincing evidence for IPR/PGR invalidation. This is an excellent change. We have seen so far a lot of (for lack of a better word) “silly” constitutional challenges (e.g., VII amendment, separation of powers, takings clause, etc) to the post-grant review systems of the AIA—challenges that never stood any likelihood of success. There are, however, floating around out there two potential challenges that have some actual merit: (1) a substantive due process challenge based on the distinction between more-likely-than-not and clear-&-convincing; and (2) an appointments clause challenge. By raising the evidentiary level necessary to find unpatentability to “clear-&-convincing,” this act closes off the first of those grounds of challenge. In other words, these statutory amendments would make it less likely that the IPR/PGR system could be brought down by a constitutional challenge. That is all to the good.
JoeJuly 10, 2019 07:07 pm
Any indication if this is in addition to or in lieu of the recently discussed changes to § 101 and 112?