Posts in Government

A brake-down of the major provisions, the Amendments that passed and some key Amendments that failed… On Thursday, December 5, 2013, the United States House of Representatives passed the Innovation Act by a vote of 325-91. Surprisingly, the Innovation Act (HR 3309) had only been introduced on October 23, 2013, and was marked-up on November 20, 2013. “This schedule suggests the fix was in,” said Congressman Dana Rohrabacher (R-CA) on December 3, 2013, “The clear message to little inventors: give thanks for your intellectual property rights, because you may not have them by this time next year.”

One of the things specifically alleged as demonstrating lack of control over his practice was his antiquated docketing system. Until 2005 Tachner used a “white board” system that was updated monthly and only included three months of data. It only had 3 columns, which were the client docket number, the type of action and the due date. If action were taken a handwritten line entry was placed after the due date. If action was not taken by the due date it would remain not the white board for a few months, but then ultimately removed without any action ever being taken. In 2005, this system was updated to a Word document that did not use tables, but instead included single line strings of data. There was no back-up docketing system, nor was any inventory of files ever done to ensure the integrity of the Word document docket. As you might imagine, this type of “docketing system” created problems.

Crowell & Moring LLP announces Teresa (Terry) Stanek Rea, former acting and deputy director of the USPTO and acting and deputy under secretary of commerce for intellectual property returns as a partner in the firm’s Intellectual Property Group.

As evidenced by the numbers above, the Board takes as many cases as they reasonably can within the statute. If there’s a good case to be made that a case could be litigated in PTAB, it’s usually accepted. As of last month, the office has instituted 192 trials and denied 32 trials for an overall institution rate of 85.7 percent, according to a statistics report compiled by the PTO. One example of this is Intellectual Venture Management, LLC v. XILINX, Inc., IPR2012-00018, Paper 12 (P.T.A.B. Jan. 24, 2013). Here, XILINX argued that IVM’s petition should be denied, because IVM failed to identify all the real parties in interest as required by 37 C.F.R. § 42.8(b)(1). XILINX pointed to another case in California where IVM was listed with 5 other defendants in a suit that had 63 entities as evidence of IVM’s failure. The Board ruled in IVM’s favor, saying that XINLINX had not given any argument for why the civil local rules of the Northern District of California are analogous to the Board’s rule on real parties in interest or for specifically why any of the 63 entities were real parties of interest.

There is a battle cry against abusive litigants in the patent industry. Among the tactics suggested is a “loser pays” system to try to mirror Europe, where this type of abuse is minimal. The Congressional Research Service presents that 92% of companies who assert but do not make products (over broadly and derisively called “trolls”) lose litigation that reaches judgment on the merits… Defendants can call upon the PTO to trigger up front fee shifting for the patent owner and an accelerated PTO determination on the validity, even potentially before the court analyzes it. But there’s more. IPRs and CBMs can be used to drive settlement, either before or after filing. Pre-filing, a drafted petition can be shown to the patent owner as a basis to settle.

Selling v. Radford, 243 U.S. 46 (1917), sets the standards for imposing reciprocal discipline on the basis of a State’s disciplinary adjudication. Under Selling, State disciplinary action creates a federal-level presumption that imposition of reciprocal discipline is proper unless an independent review of the record reveals: (1) lack of due process, (2) an infirmity of proof of the misconduct, or (3) that grave injustice would result from the imposition of reciprocal discipline. The standard the responding attorney must meet is one of clear of convincing evidence that the Selling factors preclude reciprocal discipline.

“Notably, the concerns of key inventor stakeholders like us – principally small companies that create the fundamental inventions that drive our innovation economy – have not yet been evaluated in depth. Historically, the vast majority of legitimate patent holders have honorably sought the fruits of their labor through patent rights promoted by the Constitution and secured by Congress, by licensing when possible and litigating when necessary. Our nation and, indeed, our planet have benefitted enormously as a result of the identification and disclosure of these discoveries through the U.S. patent system. Legitimate inventors and patent holders should not be confused with, or punished as a result of, a small minority of bad actors who create shell entities that send mass demand letters for the purpose of seeking money under the threat of unjustifiable litigation.”

The U.S. Department of Commerce’s United States Patent and Trademark Office (USPTO) announced that the San Jose City Hall building, located at 200 East Santa Clara Street, has been selected as the permanent location for the USPTO’s Silicon Valley satellite office. The search for permanent office space was put on hold in July due to sequestration. Generous support and assistance from the City of San Jose, the California State Assembly’s Speaker’s Office, along with the collective support for the satellite office championed by members of the California congressional delegation, will enable the USPTO to move forward with occupying permanent space in Silicon Valley by the end of 2014.

Congressman Bob Goodlatte (R-VA), is continuing to fast track the Innovation Act (HR 3309) despite growing concerns from both Republican and Democrat members of the House Judiciary Committee… One major question is whether we really want to go to a loser pay system with respect to patent infringement litigation? That sounds nice, but it will no doubt have a chilling effect, perhaps most chilling on the entities that are not abusers of the litigation system. It will undoubtedly make it harder for small businesses and start-ups to obtain the critical funding they need because investors will rightfully worry about whether the company may ultimately become embroiled in patent litigation, lose and then have to foot the bill for the entirety of the litigation. Even more problematic is the loser pay provisions coupled with the joinder provisions, which the University community believes could lead to entities being pulled into patent litigation against their will. If that happens and they lose they would be on the hook for paying the fees of the other side despite not willingly participating in the litigation. How is that fair? That would have a significant chilling effect without a doubt.

Calling the Innovation Act fast-tracked doesn’t do justice to what is really happening. The Innovation Act was only officially introduced on October 23, 2013, and the Committee has not heard from any independent inventors or small businesses. Even the innovator community that stands to lose big is just warming up, this past week with a substantial coalition of University groups and the Biotechnology Industry Organization (BIO) weighing in for the first time, with BIO concluding that the “proposals are not supportable without significant amendment.” The University groups weighing in against the Innovation Act are the Association of American Universities, American Council on Education, Association for American Medical Colleges, Association of Public and Land-grant Universities, Association of University Technology Managers and Council on Government Relations, collectively referred to in their position statement as “the Higher Education Community.”

The testimony further discusses the Commission’s interest in the problem of “patent hold-up” that can arise during an industry standard-setting process. Patent hold-up occurs when the holder of a standard essential patent (SEP), which has previously committed to license that SEP on reasonable and non-discriminatory (RAND) terms, violates its RAND commitment and uses the leverage of the standard setting process to negotiate higher royalties than it could have before the patent was incorporated into the standard. The FTC recently pursued several enforcement actions related to patent holders who seek injunctive relief or exclusion orders for alleged infringement of their RAND-encumbered SEPs.

Jaeger did not file a response to the complaint, despite being granted two extensions of time to do so. He did, however, send two brief fax messages to OED, in one pointing out that he was an honorably discharged veteran who served during the Vietnam era, and in another pointing out that the underlying complaint that initiated disciplinary involvement stemmed from a disagreement with a client who did not want to pay his bill. Unfortunately for Jaeger, however, he never filed an answer, which meant that the allegations within the complaint were all deemed to be admitted. See 37 CFR 11.36(d).

It is not common to see a petition for reinstatement, much less an actual reinstatement. That is, however, what happened with respect to Mr. B., who was suspended nunc pro tunc from October 26, 2009, for a period of 60 months, but with the last 24 months stayed. B’s petition for reinstatement was successful, and he is once again a patent agent registered to practice at the USPTO. In the original disciplinary proceeding that lead to the suspension, the OED Director filed a disciplinary complaint against B on October 26, 2009, and then Director Kappos entered an interim suspension order because B was convicted of a felony. Authority for such an interim suspension comes from 37 CFC 11.25.

The meeting will now be held on December 12, 2013 from 8:30 a.m. to 5:30 p.m. ET at the USPTO headquarters in Alexandria, VA and the period for post-meeting comments has been extended. The deadline for filing pre-meeting comments is November 13, 2013.

The hearing focused on the effect the Innovation Act would have on the problem of abusive litigation practices and on the patent system as a whole. Three central themes emerged from the hearing: 1) there is an urgent need to fully fund the PTO; 2) significant skepticism remains about expansion of the Covered Business Method (“CBM”) program; and 3) some of the more technical aspects of the Innovation Act would help rid the patent system of expensive and wasteful lawsuits. Divergence of opinion remained among the Members, however, about whether Congress should address fee shifting at this time or wait for the Supreme Court to hear the two fee shifting cases before it, although the witnesses agreed that legislation on fee shifting would be helpful, and Congress should proceed with legislation on this front.