Posts in Capitol Hill

EDITOR’S NOTE: What follows is a summary of the Goodlatte patent bill created by American Continental Group, which is a government affairs and strategic consulting firm in Washington, DC. Manus Cooney, a former Chief Counsel of the Senate Judiciary Committee is one of the partners at ACG, and is also frequent guest contributor on IPWatchdog.com. Cooney and his partners and associates worked to prepare this summary, which was described as a team effort. It is republished here with permission.

The GAO report explains that the number of patent litigations only slightly fluctuated between 200o and 2010, with a one-third increase in 2011, which the report attributed to changes to patent laws ushered in by the America Invents Act and not as the result of any problematic increase in litigations initiated by patent trolls. This increase in patent litigation was by design, with joinder provisions in the AIA guaranteeing an increase in patent litigations. Still, the GAO report further found that companies that make products brought most of the lawsuits and that nonpracticing entities (NPE) brought about a fifth of all lawsuits. So there isn’t a patent troll problem at all despite the protestations of the Silicon Valley elite who think every patent they get sued on is invalid and every patentee plaintiff is a patent troll.

Instead of condemning NPES, the GAO emphasized at the very outset of its report that our nation’s history is filled with examples of inventors who did not develop products based on the patented technologies… [O]verall, the report directly and indirectly supports the view that there is no patent litigation crisis and that, to the extent that there are problems with the patent system, they are linked primarily to patent quality – not the identity of the patent owner (e.g. NPE, PAE, PME, operating company or whatever name one chooses to use).

A troubling fundamental aspect of the proposed mandatory stay is that it would chip away at the quid pro quo of the patent bargain. To ensure the Constitutionally-protected exclusive right, patent rights have long been recognized as covering multiple and independent separate causes of action: “whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.” 35 U.S.C. § 271(a) (emphasis added). Strict liability attaches to each one of these forms of infringement independently of the others. These are separate violations, any one of which being subject to injunctive relief “to prevent the violation of any right secured by patent.” 35 U.S.C. § 283.

While in the Solicitor’s Office at the USPTO Chen’s notable Federal Circuit arguments included In re Bilski, In re Nuijten, and In re Comiskey. While I disagreed with the Federal Circuit decision in each of those cases I still believe Chen to be an excellent choice for the Federal Circuit. While some may look at the cases where Chen defended the Board, that was his job and I would caution reading to much into the briefs filed looking for a window into the judicial philosophy of Chen. Indeed, I have every reason to expect that he will align himself with the pro-patent wing of the Court.

With sequestration finally cutting the Republicans don’t seem to be in any rush whatsoever, so the Patent Office which really should be exempt is caught in the cross hairs. Although it is easy to point at Congressman Wolf, a Republican, and say the Republicans are to blame, that would be a mistake. Senator Coburn (R-OK) is a Republican and he fought to fully and fairly fund the USPTO. Furthermore, the reason the USPTO is bound by sequestration is thanks to the interpretation of the Office of Management and Budget. OMB is a part of the Executive Branch, so the President is in no way blameless. He has no trouble ignoring Congress when it suites him (i.e., the health care employer mandate delay) but when an argument could logically be made that the USPTO is not covered by sequestration no such argument was made. Thus, this is less a political issue than it is really bad kabuki theater.

On June 24, 2013, 17 Members of Congress wrote a letter to Congressman Frank Wolf (R-VA) and Congressman Chaka Fattah (D-PA), who are respectively the Chairman and the Ranking Member of the Subcommittee on Commerce, Justice, Science of the House Appropriations Committee. The letter to Congressmen Wolf and Fattah was short and to the point, saying: “We write to request your assistance in addressing the Office of Management and Budget’s (OMB) recent decision to sequester user fees which fund the United States Patent and Trademark Office (USPTO). As a result, almost $150 million in inventors’ fees in Fiscal Year 2013 have been locked in USPTO’s general fund. We request that the Approrpiations Committee allow USPTO to access the sequestered user fee funds.”

Earlier today Congressman Mike Honda (D-San Jose), Congresswoman Zoe Lofgren (D-San Jose) and Congresswoman Anna G. Eshoo (D-Palo Alto) introduced the Patents And Trademarks Encourage New Technology (PATENT) Jobs Act to exempt the United States Patent and Trademark Office (USPTO) from the what they sponsors called debilitating cuts imposed by budget sequestration. Indeed, those who have followed this issue know that during the debate and ultimate passage of the America Invents Act (AIA) much was made of the ability of the USPTO to keep its fees and use them to support ongoing business operations. Written promises were made, no binding promises were enacted as part of the legislation, and few could have anticipated that so soon after the USPTO would once again be facing a budget shortfall. See Lack of Commitment to PTO Funding.

The latest incarnation of the SHIELD Act was introduced on February 27, 2013, and changes direction as if the first iteration were waived off in disgust before it could even lower its gears. SHIELD Act 2, scuttles the “reasonable likelihood of succeeding” idea floated and introduces a new tool aimed at walling off the troll: a bond requirement. If the plaintiff is not an original inventor or assignee, did not make a substantial investment in practicing the invention, or is not a university, that troll must post a bond. Like SHIELD Act 1, SHIELD Act 2 does not require the troll to fire the first shot. Interestingly, under SHIELD Act 2, Facebook would have had to post a bond in its battle against Yahoo! and theoretically an involuntary but necessary party joined as a plaintiff could be required to post bond.

“Patty Sue Just Won’t Go Away.” So went a 2002 article in the San Francisco Chronicle, one of a many articles spanning several years about Patricia McColm, a vexatious litigant blacklisted since 1994. She was the Most Vexatious Pleader of the vexatious litigants. If she were a patent attorney, frightened examiners would give her a 100% allowance rate without amendments. If the anti-joinder provisions of the America Invents Act (“AIA”) applied to Patricia McColm, she would have her own clerk’s office. One draws similarities between the problems presented by firms such as Intellectual Ventures, Acacia, and Lodsys and those presented by Ms. McColm, and a flurry of proposals were recently introduced in Congress.

The Copyright Office has told Congress that the copyright laws are showing their age and need Congressional attention. With the prospect of comprehensive copyright reform on the horizon the familiar battle lines are being drawn between those who absolutely need copyright protection to survive and create versus those who are a part of the infringement culture. Without a solution to the growing culture of infringement original creation of copyrightable works will continue to experience downward pressure, which will ultimately curtail original creation by all those other than corporate conglomerates that have the resources to police and enforce. Do we really want to see the market squeeze out independent content creators due to copyright laws that don’t function given the new age technological realities?

The House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet on March 14, 2013, heard from six witnesses that the business of “patent assertion entities” (PAEs) is inflicting severe harm on a broad range of technology users. The witnesses at the hearing agreed that, when confronted PAE demand letters on frivolous claims, settlements by and large are economically unavoidable.

Opponents of effective copyright laws are attempting to leverage the success of the petition into a wide-ranging assault on section 1201 of the DMCA — and, no doubt eventually, on copyright law itself. Along with Khanna, a coalition consisting of the Electronic Frontier Foundation, Fight for the Future, Mozilla, Reddit, and others have launched fixthedmca.org, the ultimate goal of which is to repeal section 1201 in its entirety. These efforts are misguided. Section 1201 is not only required by international obligations, it has also enabled a variety of successful business models — from DVDs to Netflix to Pandora — that have benefited consumers and creators alike in a digital age.

Almost two weeks ago the United States Patent and Trademark Office issued two Federal Register Notices in anticipation of the U.S. converting from first-to-invent to a first-to-file regime. The first were the Changes to Implement First to File and the second was First to File Guidelines. Both are important. The new regulations that make up 37 CFR are found in the former, but much of the meat and potatoes are found in the later. The Guidelines, which the USPTO says they are not obligated to follow, is where the Office spends most of the time comparing and contrasting old pre-AIA 102 with AIA 102. The Guidelines is also where the USPTO explains which cases they believe have been overruled (i.e., Hilmer and Metallizing Engineering) and which cases continue to have relevance. They also selectively cherry pick portions of the legislative history to back up their interpretations.

Two weeks ago House Judiciary Committee Chairman Bob Goodlatte (VA-6) announced the House Judiciary Committee’s Republican subcommittee assignments for the 113th Congress. See Republicans of the House Subcommittee on Intellectual Property. Today we meet the Democrats on the Subcommittee. It is the Subcommittee on Intellectual Property, Competition, and the Internet that has primary jurisdiction over matters relating to intellectual property matters. Thus, the House Subcommittee on IP that will be one of the primary focal points for any new legislation that deals with intellectual property over the next two years.