Leahy-Tillis Amendments to Endless Frontier Act Opposed by Inventor Advocacy Group

“US Inventor believes that any substantive patent reforms should be fully addressed through the normal legislative channels and not rushed to the Senate floor without debate by tacking amendments onto a larger bill.”

Senator Patrick Leahy

Thom Tillis

Senator Thom Tillis

The full U.S. Senate is currently considering passing S. 1260, the Endless Frontier Act, a bill that would establish a Directorate for Technology and Innovation within the National Science Foundation (NSF) that would work to establish U.S. dominance in crucial areas of basic research including artificial intelligence, high-performance computing and advanced manufacturing. The bill, which represents a bipartisan effort to address China’s ambitions to become a globally dominant technological power, includes a pair of amendments from Senators Patrick Leahy (D-VT) and Thom Tillis (R-NC) that would impact U.S. patent law by requiring foreign entities to register ownership changes to ensure the availability of infringement remedies, and by increasing the scope of ex parte reexamination to adjudicate whether patent claims are unenforceable for inequitable conduct. But according to small business and independent inventor advocacy group US Inventor, these amendments would negatively impact their members.

The Endless Frontier Act: Is Logrolling Causing the Bill to Lose Its Legislative Purpose?

The Endless Frontier Act passed successfully out of the Senate Committee on Commerce, Science, and Transportation on May 12 and POLITICO has reported that the full Senate could approve the bill by early June. Although the bill enjoys support from top Senate Democrats and Republicans, including Chuck Schumer (D-NY) and Todd Young (R-IN), critics of the current draft of the legislation have taken issue with legislative edits that have reduced the amount of funding earmarked for the NSF’s Technology Directorate. Those critics have suggested that a fair amount of logrolling, the legislative practice of trading votes for favors, often in the form of legislative amendments, may be subverting the original intent of the Endless Frontier Act, which has received 215 amendments thus far in the legislative process.

Two of those amendments will have the effect of curtailing patent rights for certain types of patent owners. Senate Amendment 1740 submitted by Sens. Leahy and Tillis would amend the language of 35 U.S.C. § 261, which governs ownership and assignment of U.S. patents, by creating a register of interests at the U.S. Patent and Trademark Office (USPTO). Although the register would track ownership interests for granted patents and patent applications generally, it would require recording the assignment of any patent interest greater than 10% for a particular asset to a foreign entity within 90 days of the assignment to that entity. Foreign entities failing to comply with this assignment recording requirement would not be able to recover any monetary damages in any infringement litigation for the period during which the patent asset’s ownership interest wasn’t properly recorded.

The second Leahy-Tillis amendment, Senate Amendment 1741, would amend a series of statutes related to ex parte reexamination proceedings within the USPTO such that a party challenging patent claims can assert that particular patent claims should be unenforceable due to inequitable conduct. Language on challenging patent claims as unenforceable on the basis of evidence that the claims were obtained through fraudulent conduct would be added to 35 U.S.C. § 302, governing requests for reexamination; 35 U.S.C. § 303, governing determinations by the USPTO Director of whether a substantial question of patentability has been raised by a reexamination request; 35 U.S.C. § 304, governing orders for reexamination proceedings to resolve patentability questions; and 35 U.S.C. § 307, governing certificates of unpatentability or claim cancellation following reexamination proceedings.

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Leahy-Tillis Amendments Dredge Up PATENT Act Debate Issues

US Inventor said in a statement this week that the issues addressed by the Leahy-Tillis amendments have been resurrected from prior legislative hearings in 2015 regarding S. 1137, the Protecting American Talent and Entrepreneurship (PATENT) Act. The PATENT Act was one of several patent reform bills winding its way through the halls of Congress during 2015; IPWatchdog President and CEO Gene Quinn said at the time that the PATENT Act had the most misleading acronym of the proposed bills at that time, as it had “nothing to do with talent or entrepreneurship, but everything to do with patents.” While large companies, industry groups and some DC lawmakers held positive views of the PATENT Act, groups like the Innovation Alliance and the Biotechnology Innovation Organization (BIO) noted that heightened pleading standards, discovery stays and other provisions of that bill would have made it harder to enforce patent rights without any corresponding addressing of abuses of inter partes review (IPR) proceedings at the Patent Trial and Appeal Board (PTAB), which have harmed U.S. innovation. US Inventor said that the bill was “pushed heavily by Big Tech” and “would have done great harm to inventors and innovative small businesses.”

The PATENT Act faded into obscurity during the 114th Congress, dying in committee without ever being passed onto the floor of a Senate for a full vote. It doesn’t appear that the Leahy-Tillis amendments to the Endless Frontier Act would enact any substantive provisions of that bill, and the creation of an ownership registration requirement for foreign entities at least fits within the spirit of the Endless Frontier Act’s stated goal of maintaining U.S. technological dominance over China. However, US Inventor believes that any substantive patent reforms should be fully addressed through the normal legislative channels and not rushed to the Senate floor without debate by tacking amendments onto a larger bill. To that end, US Inventor is urging inventors, small businesses and others interested in promoting the prospects of independent inventors and entrepreneurs to contact their elected Senators by calling the Capitol Switchboard at (202) 224-3121 or by using other official means to contact elected Senators.

In a statement sent to IPWatchdog, the offices of Senators Tillis and Leahy had this to say about the amendments:

Senators Leahy and Tillis’s amendments are about promoting transparency in patent ownership and preventing fraud, period. Patents provide exclusive rights that can be used against the public. The public has a right to know who owns them as they are often sold and resold. There is also an increasing risk that our patent system will see a flood of fraudulent applications, presenting the very same problems that Congress just addressed in the Trademark Modernization Act. These amendments will help the United States get ahead of this problem and ensure a fair innovation system. No American company or inventor should oppose efforts to root out fraudulent patents and prevent the public from knowing who owns a limited monopoly.

Sullivan Amendment Would Prevent TRIPS Waiver for COVID-19 Vaccine Patents

Although the full text of the Endless Frontier Act, as well as other amendments submitted for that bill, include no other substantive changes to Title 35 of the U.S. Code governing patent law, Senator Tillis is also listed on an amendment submitted by Senator Dan Sullivan (R-AK), Senate Amendment 1919, that would prevent the U.S. Trade Representative from either proposing or supporting a waiver of intellectual property rights under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) related to copyrights, patents, industrial designs and undisclosed data for COVID-19 vaccines. Such an amendment would undermine the Biden Administration’s recent decision to support the TRIPS patent waiver currently proposed at the World Trade Organization (WTO), a proposal that has met with much controversy from those who point out that there is no scientific evidence that patents pose an access barrier for vaccines. Sullivan’s amendment preventing the TRIPS waiver for COVID-19 vaccines is also supported by Senators Tom Cotton (R-AR) and Joni Ernst (R-IA).

 

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24 comments so far.

  • [Avatar for Pro Say]
    Pro Say
    May 28, 2021 10:14 am

    Big +1 mike.

    Big. Plus. One.

  • [Avatar for Anon]
    Anon
    May 28, 2021 10:03 am

    Mr. DeLassus,

    Your statement of “The founders were not “patent maximalists” in any meaningful sense.” is preposterous.

    The 1790 patent act had politics, cronyism, and class structure baked into its very design.” – suffers from Liberal Left revisionist claptrap.

    Get out of your own way.

  • [Avatar for mike]
    mike
    May 28, 2021 12:51 am

    The opposition to attempts to figure out who owns patents is hard for me to wrap my head around.

    There is no opposition to attempts to figure out who owns patents. There is opposition to the additional ways to kill an inventor’s patent, and the sloppiness of Tillis and Leahy in trying to pull a fast one with this amendment. Just read the text — No party may recover any monetary damages [if] the patent is not properly recorded — and see my post above showing how easy it would be for an inventor to end up in a situation where he/she does nothing wrong and then cannot recover because of a third party’s oversight or even malice.

    If Congress wants to keep a record of who owns a patent, fine. The USPTO already does that and has the means. Just don’t go creating new traps where inventors can lose their rights in the process.

    And by the way, I was unaware that a patent, which is a disclosure of one’s invention (i.e., losing one’s security over one’s knowledge for the sake of the public good), was a “security threat”. Willingly giving up a secret has now become … a security threat? Hmm. Well I straight up call B.S. on that one.

    Patents are public. Has Congress lost its mind? Rather that chase this nonsense, Congress needs to wake up and realize the friendly fire against their own they created with the PTAB.

    If Congress sees patents by foreigners as a security threat, then how about this: exempt all US citizens from the PTAB and give US companies carte blanche to drag foreigners into that gauntlet.

    … Nahh…that’s probably a stupid idea. Not to say that Congress hasn’t already achieved that milestone. I mean, if they can be stupid once, let’s keep at it and keep things fun.

  • [Avatar for Greg DeLassus]
    Greg DeLassus
    May 28, 2021 12:18 am

    @20 [Uncertain ownership] was enough of a problem on the trademark side that Director Iancu took action. Why would patents be any different?

    Don’t know, don’t care. I neither support nor oppose the imposition of a mandatory recording law, except that if we are going to have such a law, we should endeavor to make it consistent with our pre-existing treaty obligations.

    @18 [I]n America 1790-2006, anyone could obtain a patent, compete, build a business – based almost entirely on merit…

    Pause and ask yourself how you know how hard it was to obtain a patent or start a business in 1790. I dare say that an honest reflection on that question will end with the realization that you do not know what you are talking about. Not to put too fine a point on it, but in 1790 much of our population was enumerated as only 60% of a person, and another large swath had no legal control over their own assets. All talk of “anyone” being able to do such-&-so is so obviously incorrect that I am hard pressed to understand why you are embarrassing yourself like this to make such an argument.

    I am not saying that everything about the patent system is presently optimal. My only point is that the precise patent system that the Founders contrived was distinctly suboptimal—even based on the criteria that you hold forth as the rod by which we should reckon (“[not] have to be able to influence the PTAB, the USPTO Director, the OMB, the Congress, and the Supreme Court”). The 1790 patent act had politics, cronyism, and class structure baked into its very design.

    We have come a long way since then, and we should all be glad of it. The founders were not “patent maximalists” in any meaningful sense.

  • [Avatar for Jonathan R Stroud]
    Jonathan R Stroud
    May 27, 2021 09:08 pm

    I’ve probably veered a bit too hyperbolic here, but I wanted to make a point. The opposition to attempts to figure out who owns patents is hard for me to wrap my head around. The opposition to mandatory recordation, even moreso. If (as US Inventor and others certainly are) you are arguing that patents are a form of property, why would motorcycles need to be registered and titled, but not patents? I can’t think of a property asset class without mandatory recordation. As a former examiner, I never understood (and still don’t) why there’s so little concern for just not knowing who owns what.

    Pro say, I respect and encourage everyone’s right to an opinion (and sharp ones at that), but I have to say, at least for my part, I’m always here, posting in my own name, never anonymously. It’s probably not advisable, but I think that matters. I’ve tried to explain my reasoning and respond and support my points, respectfully, in every debate. We can disagree, but the anonymity is, it strikes me, what this debate is about, on some level.

    Greg— nonrhetorical question. it was enough of a problem on the trademark side that Director Iancu took action. Why would patents be any different?

  • [Avatar for Greg DeLassus]
    Greg DeLassus
    May 27, 2021 08:20 pm

    The forest you’re missing is the foundational importance the Founders placed on—in stark contrast to… England—the ability of all inventors; regardless of… who they knew in high… places; to obtain protection for their innovations. Equal access [for] all.

    But that is my point. The Founders did not create the system that you rightly celebrate. That was a later development. The Founders created a system where high government officials (the Atty. General, the Sec. of State, & the Sec. of War) exercised discretion over every patent application, awarding terms of varying lengths—or even no patent at all—at their unreviewable discretion. The Founders created a patent system in which slaves could not even apply for a patent.

    The noble system that you rightly celebrate—in which we all approach in equal standing—is a later creation. This was not the system created by the Founders.

  • [Avatar for Josh Malone]
    Josh Malone
    May 27, 2021 08:04 pm

    Greg – what are you talking about? The modern system is the elitist system that our Founders explicitly rejected. Participation in today’s patent system requires unfathomable wealthy and immense political influence. This was the holding in Oil States – patents are privileges like the right to operate a toll bridge. Just like in England you could purchase a patent for an industry, a port, a colony, etc.

    But in America 1790-2006, anyone could obtain a patent, compete, build a business – based almost entirely on merit. Not anymore. Now you have to be able to influence the PTAB, the USPTO Director, the OMB, the Congress, and the Supreme Court. You have to have hordes of lawyers, tens of millions of dollars, and a decade or more of litigation jeopardy. It is the most irrational nonsensical patent system conceivable.

    I cannot comprehend your view of reality. What are you talking about?

  • [Avatar for Pro Say]
    Pro Say
    May 27, 2021 07:53 pm

    “The ‘maximalist’ position was not the founders’ position. The assertion to that effect is not historically supportable.”

    Respectfully, Greg, in pointing to the few explicit “patent words” of the Founders, you’re not seeing the forest for the trees.

    The forest you’re missing is the foundational importance the Founders placed on — in stark contrast to how it was it was during that time period in, e.g. England — the ability of all inventors; regardless of social status, the money or assets they had, or who they knew in high government places; to obtain protection for their innovations.

    Equal access to all.

    Which is a far cry from today’s American patent landscape, where — thanks to SCOTUS, the CAFC, and perhaps most unbelievably, our very own Congress — patenting has become a sport of kings.

    A sport for the rich. For the powerful. For the well-connected.

    From eBay to KSR to Mayo / Alice . . . from the AIA to the PTAB Death Squad to the CAFC’s repeated misapplication of Mayo / Alice . . . the little guy and gal stand little if any chance.

    When it comes to protecting innovation, today’s America is not the America our Founders created.

    Far from it.

  • [Avatar for Greg DeLassus]
    Greg DeLassus
    May 27, 2021 04:27 pm

    “ The Founders of our Nation were — for great reason — patent maximalists.”

    Huh? The Federalist papers give exactly one paragraph to the subject of patents. Scarce evidence, in other words, that this was a topic that much occupied their minds.

    Moreover, the first patent act allowed *at most* a 14 year term. That was the most they could award, but the law permitted the awarding of fewer years (“the Secretary of State, the Secretary ?for the department of war, and the Attorney General of the United States…, or any two of them,…, if they shall deem the invention or discovery sufficiently useful and important… [may grant] letters patent… for any term not exceeding fourteen years…”). In other words, the founders’ original implementation of clause 8 was fairly limiting and arbitrary.

    It was only in time that are system evolved into the more orderly and capacious patent system that we enjoy today. I happen to think that the modern system is better than the founders’ more arbitrary and crabbed view of patents.

    The “maximalist” position was not the founders’ position. The assertion to that effect is not historically supportable.

  • [Avatar for Pro Say]
    Pro Say
    May 27, 2021 02:50 pm

    Stroud: ” Pro Say, you’re proving my point. Patent maximalists don’t care about any of these objective truths—they just kneejerk oppose anything that either they didn’t think of or that they don’t understand.”

    The Founders of our Nation were — for great reason — patent maximalists.

    It is accordingly a badge I wear with great pride and honor.

    A badge that untold numbers of American, and indeed world, innovators also wear with great pride and honor.

    A badge that you and your innovation-stealing members will never qualify to wear.

  • [Avatar for Greg DeLassus]
    Greg DeLassus
    May 27, 2021 12:10 pm

    [P]ropose an alternative for how the US government can figure out who owns what.

    I will not be super fussed if we never find a “solution” to this “problem.” At a minimum, however, if we do not want this mandatory recordation idea is to create a mess of trade retaliations for us in the WTO, we will want to make the penalties for the mandatory recordation rule apply to all patent owners, not merely to foreign owners of U.S. patents,

  • [Avatar for Jacek]
    Jacek
    May 27, 2021 11:17 am

    We are squabbling here about some nonsense introduced by pair of patent hooligans working on behalf of Big Tech. At the same time, the ADULTS on the other side of the Atlantic are working to promote IP development. EPO newsletter 10/2021 I just received is sharing info about :
    PATLIB2021 conference heralds enhanced support for innovators in Europe.
    I think it is time to grow up.

  • [Avatar for Jacek]
    Jacek
    May 27, 2021 11:04 am

    What is definition of “Fraudulent patent application”?
    Is it written in French and use Russian alphabet?
    Or is it me claiming that I invented atomic bomb?

  • [Avatar for Anon]
    Anon
    May 27, 2021 10:56 am

    Stroud is out to lunch — on a number of fronts.

    The one for my though that resonated most was, “the kind of mindless opposition that helped kill the 101 draft bill

    Which absolutely misses the boat as to both WHY the bill died and WHO was responsible for killing it.

    The straight up and direct fix of 101 should have been uncomplicated, and it was those seeking to complicate and throw in Trojan horses that were rightfully rejected.

  • [Avatar for Mark Nowotarski]
    Mark Nowotarski
    May 27, 2021 09:59 am

    “We finally looked there and found a crazy number of fraudulent applications. ”

    Interesting. Can you provide a link to the study? What was the nature of the trademark fraud?

  • [Avatar for Jonathan R Stroud]
    Jonathan R Stroud
    May 27, 2021 09:37 am

    Based on the flood of fraudulent trademark applications? We finally looked there and found a crazy number of fraudulent applications. We simply haven’t looked at the patent side yet.

    And economic concern IS a national security concern. In 5G, the licensing picture is shaping up to be that most worldwide companies will have to pay PRC-controlled firms. Their market share is currently guessed at like 30% compared to the next closest three, Ericsson, Nokia, and Qualcomm, all in the teens. They are going to dominate the licensing picture based on a state-sponsored effort to win the economic war. That’s just what’s happening. The Iancu Administration studied the problem on the trademark side but ignored the patent side, largely because they have no data, and no way to get the data. Senator Marco Rubio agrees; a bipartisan coalition of Congresspeople and Senators agree; most Americans agree; nearly all economists, national security scholars, and Trump AND Biden officials agree. Bob Barr spoke frequently about this. Pro Say, you’re proving my point. Patent maximalists don’t care about any of these objective truths—they just kneejerk oppose anything that either they didn’t think of or that they don’t understand. Again, propose an alternative for how the US government can figure out who owns what. Otherwise we are left with a system where more than 50% of all US patents issue to and are used to exert market pressure against US companies. Last year, that was over 200,000 US patents issuing to foreign applicants. That’s not political, it’s just a fact.

  • [Avatar for Mark Nowotarski]
    Mark Nowotarski
    May 27, 2021 08:43 am

    ” There is also an increasing risk that our patent system will see a flood of fraudulent applications,”

    Based on what?

  • [Avatar for Bart]
    Bart
    May 26, 2021 10:52 pm

    Stroud says “China could own 40% of all US 5G patents right now through unrecorded transfers, licenses, or other entities…”

    Okay. They COULD. And if they did, so what. A patent is public knowledge. If 5G were to become a security concern, then, by the nature of public knowledge, US companies not wanting to license can either 1) work around it, or 2) invent something better.

    This is not a problem at all, but remains consistent with the Patent Clause, as it progresses the arts and sciences. If you don’t like that, you are welcome to amend the constitution.

  • [Avatar for Pro Say]
    Pro Say
    May 26, 2021 10:42 pm

    The cool thing ’bout that Stroud fellow is that it’s oh, so easy to know that which is good for American innovation . . . and that which is bad.

    Whatever he likes . . . is bad for American innovation.

    Whatever he doesn’t like . . . is good for American innovation.

    See. Easy peasy.

  • [Avatar for Jonathan R Stroud]
    Jonathan R Stroud
    May 26, 2021 10:04 pm

    People are rightfully concerned with getting an accurate picture of foreign patent ownership—that’s it. Right now there isn’t a single person in world, much less the US government, who knows which US parents are owned by which foreign countries. Just as a SUPER CRITICAL relevant national security example, China could own 40% of all US 5G patents right now through unrecorded transfers, licenses, or other entities—well beyond what private landscapes have tried to show to date—and no one in the US national security apparatus would have any idea—no one in the US would have any idea. That “U.S. Inventor” is kneejerk opposing this is both to be expected, and makes one wonder what possible reasons they could have to rush to defend the interests of foreign corporations and unrecorded US patent assets. If they really think the US government figuring out who owns US patents is a bad idea, say it. If it’s with the way it is written, propose a solution. Otherwise this is just the kind of mindless opposition that helped kill the 101 draft bill before Senator Coons could even introduce it.

  • [Avatar for Anon]
    Anon
    May 26, 2021 08:13 pm

    I do not think that Mr. DeLassus has taken a full consideration of any mirror to the Hilmer Doctrine – which was never found to be a violation of TRIPS Art.3(1).

  • [Avatar for mike]
    mike
    May 26, 2021 07:28 pm

    This article states “Foreign entities failing to comply with this assignment recording requirement would not be able to recover any monetary damages in any infringement litigation for the period during which the patent asset’s ownership interest wasn’t properly recorded.

    False. The Leahy-Tillis SA1740 amendment does not say “foreign entities would not be able to recover”. Rather, it reads “NO PARTY may recover, for infringement of a patent in any litigation, any monetary damages for any period in which ownership with respect to the patent is not properly recorded in accordance with the requirements of this subsection.

    On its face, this amendment creates an easy way for an infringer to effectively kill a patent.

    Section (a)(2) of the SA1740 amendment reads:
    The Patent and Trademark Office shall
    (A) maintain a register of interests in patents and applications for patents;
    (B) record any document related thereto upon request;
    (C) not later than 90 days after the date on which a patent, or any interest in a patent of not less than 10 percent (in the aggregate), is assigned to any foreign entity or person, require the recording of that assignment.

    Note that the text reads “any foreign entity or person“. Foreign entity. Got it. But must that person be a foreign person? Or just a person? The text is not clear. So there’s the first problem right there.

    Keep reading, and Section (3) “Effect of failure to comply” of the amendment says:
    No party may recover, for infringement of a patent in any litigation, any monetary damages for any period in which ownership with respect to the patent is not properly recorded in accordance with the requirements of this subsection.

    Well, the Patent Office not properly creating a record is also a problem. If it is not properly recorded, patent owners suffer, and it might not even the be fault of the patent owners.

    But this problem is even more dire: killing a patent on the cheap.

    Suppose a big business wants to use a patent. Rather than license the patent or buy the patent, the big business strikes a deal with the patent owner to obtain a mere 10% interest in the patent. This business then intentionally transfers that interest to another party (could be a friend, for example. It’s questionable if this only applies if the friend is foreign, but no matter. Finding a foreign friend is no problem.) Then the business and that party intentionally do not tell the Patent Office about the transfer. 90 days pass, and then, as the text states, “no party may recover for infringement”. This screws those who own the other 90% interest in the patent, and they did nothing wrong. This provides an easy and cheap way for big businesses to infringe one’s intellectual property rights. Just buy a piece and work out a deal to fail to inform the office of the transfer, and boom. No recovery.

    Try again Congress. And this time, perhaps you should put your focus on the problem called the PTAB that no US-based inventor likes, but big tech loves. If you want to disrupt big tech’s monopoly that you seem to have not figured out yet, and also compete with China that is a problem, unleash American innovation by ridding of the PTAB.

  • [Avatar for Pro Say]
    Pro Say
    May 26, 2021 07:19 pm

    Greg: “The foreign registration provisions would put us in violation of TRIPS Art. 3(1)”

    As if Congress or the President care even a whit about such violations.

  • [Avatar for Greg DeLassus]
    Greg DeLassus
    May 26, 2021 05:35 pm

    The foreign registration provisions would put us in violation of TRIPS Art. 3(1) (“Each Member shall accord to the nationals of other Members treatment no less favourable than that it accords to its own nationals with regard to the protection of intellectual property…”).