Posts in Capitol Hill

In the patent arena it is not hypocrisy that is fueling the misguided strategies of tech companies. Instead it is the self-interest of tech CEOs who are increasingly only concerned about the short term. This is tragic because corporations are supposed to exist in perpetuity, not just until the current CEO can cash out with his or her golden parachute. Short term thinking of tech CEOs is destroying the patent system and wasting shareholder assets. What are these companies going to do when foreign corporations push their way into the U.S. marketplace? How will CEOs explain away the existential threat they face when foreign manufacturers flood the market with goods and services without regard to long since crippled patent portfolios of the former tech elite?

Microsoft applauded the introduction of the PATENT Act. Universities seem to be on the fence, recognizing that the Senate alternative is an improvement, but likely to support amendments. The Innovation Alliance opposes the bill, pointing primarily to customer stay language that could effectively immunize large corporations from patent infringement liability. Meanwhile, according to BIO, any patent reform bill that does not address abusive filings of inter partes review (IPR) petitions will be opposed.

Yesterday the House Committee on Energy and Commerce voted to approve the Targeting Rogue and Opaque Letters (TROL) Act by a vote of 30-22. Meanwhile, the Protecting American Talent and Entrepreneurship Act (the PATENT Act) was introduced into the Senate. It is now also believed that Congressman Goodlatte may have a hearing or markup with respect to the Innovation Act at some point during the week of May 11th. However, there whispers that the Innovation Act may not be able to make it out of the House Judiciary Committee.

While Chinese President Xi is cracking down on political dissidents and solidifying his power over the army, the country has begun a huge push for innovation. While it’s easy for us to look askance at that proposition, we may be about to launch an equally quixotic experiment of our own: seeing if American innovation can survive the undermining of our patent system.

A clique of multinational corporations is pushing legislation that will be a disaster for the rest of us, especially our universities with research components. Small inventors and their patrons in academia are being asked to swallow large dosages of poison encapsulated in the bill. Two features are especially concerning: mandatory fee shifting and involuntary joinder. Together and separately, they seriously weaken and put at risk the university technology transfer process, so necessary to America’s innovative and entrepreneurial way of life.

On Monday, May 11, 2015, IPWatchdog will a co-sponsor a roundtable discussion on patent reform. This event will take place at the law offices of McDermott Will & Emery, which is located directly across the street from the U.S. Capitol. Bernie Knight, a partner with McDermott and a former General Counsel to the United States Patent and Trademark Office, will co-moderate the event along with me. We hope you can join us for this discussion.

The Innovation Act (H.R. 9) goes well beyond what is needed to address bad actions of a small number of patent holders, and instead raises costs for all legitimate patent holders to enforce their Constitutionally-given property rights in court. The perceived need for legislation to address abusive litigation practices already is being dealt with effectively by the Supreme Court, the U.S. Patent & Trademark Office, and the Federal Trade Commission. Any legislative action should be limited and focused on specific abusive behavior, not the overly broad approach on procedural aspects of enforcing patents as H.R. 9 does.

In a unanimous vote the Senate Judiciary Committee approved the Stoll nomination, which now moves on to the full Senate. If confirmed Stoll would take the vacant spot created by the retirement of Judge Randall Rader.

It’s great that John Oliver brought the subject of patent trolls, about which IPWatchdog has already produced some considerable coverage, to an audience that topped 1.4 million viewers. But there are a significant number of stakeholders in the ongoing patent debate who are not in favor of the Innovation Act and they’re not, as John Oliver would have you believe, simply lobbyists for trial lawyers. For example, the Innovation Alliance, which is made up of innovator companies, does not support the Innovation Act. Neither do independent inventor groups, independent inventors, innovative startup companies, biotechnology companies or universities. If John Oliver is for helping small business victims of patent trolls while preserving patent rights he should actually be promoting the STRONG Patents Act and not the Innovation Act.

The Innovation Protection Act, one of the lesser known patent bills percolating in Congress over the past few years, would provide a source of permanent funding for the USPTO. The fees the USPTO collects would remain available to the USPTO until expended. This common sense idea has been floated for years, but it never seems to go anywhere. Appropriators have been unwilling to commit to allowing the USPTO to keep user fees, diverting $1 billion worth of collected fees from the USPTO according to the Intellectual Property Owners Association. This may not seem like much but is a lot of money, but for an agency the size of the USPTO it is a lot of money.

The TROL Act was introduced during the 113th Congress and as Subcommittee Chairman Congressman Michael Burgess (R-TX) explained it passed the subcommittee with bipartisan support. Still, Burgess explained during his brief opening statement that he believed “the text could be amended narrowly to achieve better protections for recipients of demand letters.” Despite the previous bipartisan support, Ranking Member Congressman Frank Pallone (D-NJ) said that he cannot support the TROL Act as it is written because “it includes problematic language that does not move us forward.”

This year the Innovation Act has been reintroduced, and after some thought that the bill would sail through the House of Representatives without even an additional hearing. The Senate has also held several hearings on patent reform, with a competing view of what patent reform should look like being submitted by Senator Chris Coons in the form of the STRONG Patents Act. The House is also considering more tailored legislation narrowly focusing on demand letters (i.e., the TROL Act), and just recently Senators Tammy Baldwin (D-WI) and David Vitter (R-LA), along with United States Representatives Jim Sensenbrenner (R-WI) and John Conyers, Jr. (D-MI) submitted the Grace Period Restoration Act, which would reinstated the full 12 month grace period that was taken away from inventors as part of the America Invents Act (AIA).

Many of the provisions of H.R. 9 would unnecessarily undermine the enforceability of all U.S. patent rights, even when clearly valid patents are being enforced in good faith against clearly infringing actors. While a consensus on measures to target abusive behavior in patent litigation is achievable, the sweeping provisions of the Innovation Act cannot be supported.

There were statements recognizing the need to keep open legitimate avenues to for innovators to protect themselves against infringement, and a strong desire to make sure that legislation focus on bad actions and actors. Not surprisingly, the Committee seems to largely think that the Innovation Act does strike the proper balance, although there was also recognition that changes could be made to make the bill better. USPTO Director Michelle Lee was wholeheartedly in support of fee shifting, justifying the position by saying that fault based fee-shifting will raise the costs for those who engage in abusive actions.

The data establishes that motions for attorney’s fees under section 285 after Octane were granted at a rate almost three times as high as in the year preceding Octane. In addition, the data establishes — contrary to the witness’s testimony — that 50% of motions for fees under section 285 filed by accused infringers were granted between January 1, 2015, and March 31, 2015. In contrast, in the 12 months preceding Octane, only 13% of such motions were granted.