Posts Tagged: "Patent Reform"

U.S. patent litigation has followed the centuries-old “American Rule” under which each party to a litigation pays its own legal fees and costs, regardless whether it wins or loses the litigation. A narrow exception exists in patent cases, but only in “exceptional cases” under 35 U.S.C. § 285, such as where the losing party engaged in litigation misconduct, or if the patent was fraudulently procured, or if the losing party raised arguments that were both objectively baseless and made in bad faith. Despite the long tradition of litigants paying their own legal fees and costs, Congress has shown interest in changing the playing field and deviating from the American Rule in patent cases. This comes at a time when the U.S. Supreme Court is already considering two cases that relate to the definition of “exceptional cases” in § 285 that may well alter how this existing exception to the American Rule is applied in practice.

All of this has to make you wonder whether any new patent legislation is necessary at this time. The House of Representatives has already passed new patent legislation that focuses on patent litigation and the perceived abuses. Reasonable minds can perhaps differ about whether the measures being discussed are good, bad or would do anything to address the manipulation of the judicial process by nefarious actors. The facts suggest, however, that patent litigation is declining and the administrative trials are increasing beyond expectations. This is significant because the administrative trials were created in order to offer defendants a better, cheaper avenue to challenge patents outside of litigation. So why not allow the reforms of the AIA time to work before once again tinkering with the patent laws and potentially upsetting the incentive to innovate?

“Today, Congress is under another call to weaken patent protection. This time the alleged culprit is a so-called “patent troll” who, according to some reports, hijacks inventions and while providing no product and therefore no societal value, extorts billions of dollars from the economy. This story could not be further from the truth. The argument is based on highly questionable data. Some of the claims are that patents asserted by so-called “patent trolls” are much weaker than patents asserted by others, that these entities cause billions of dollars of unnecessary cost, and that the number of patent infringement lawsuits has risen dramatically due to the so-called “patent trolls.” All of these assertions are highly disputed.”

GROSSMAN: “I think that we will see some form of patent litigation reform passed by the Senate and then ultimately by Congress. Currently, there are very few things on which the Republicans and the Democrats can come together. However, patents and other types of intellectual property seem to be one area in which joint action is possible. I think that ultimately both parties are going to want to do something that shows that they can work together and get something important accomplished. Enacting the appropriate type of patent litigation reform would foster innovation and create jobs and thereby demonstrate to the American people that they still have a functioning Congress. The House has already passed a bill, and the President urged Congress to pass a bill in his State of the Union address. I think the momentum is there.”

CHISUM: “I’m very skeptical when Congress starts talking about reform. I don’t think there is enough sophistication in Congress and among committee staff members about how the patent system really operates and about the challenges the many thousands of people operating the system face. Most of the legislative efforts I’ve seen over the last 30 years to reform the patent system, in fact, reformed very little. The “reforms” have tended to respond to particular interest groups, to particular complainants. Congress has tended to respond only to a consensus that something was wrong rather than thinking outside the box as to what will really improve the efficiency and predictability of the patent system.”

The Main Street Patent Coalition may be the entity with the single most misleading name in the history of misleading organization names…. According to the LA Time, White Castle has 9,600 employees. How exactly is that a small business? … The corporate members of the National Restaurant Association, and the members of the National Retail Federation are some of the largest corporations in the United States. The American Gaming Association membership likewise includes some of the largest corporations in America, including several of the largest banks in the world, including Goldman, Sachs and Morgan Stanley.

“The first rule of any patent legislation should be to do no harm, particularly to the inventors, start-ups and universities that create our nation’s next big fundamental technology breakthroughs that drive GDP and job growth,” said inventor Earl “Eb” Bright, COO ExploraMed and Board member USIJ. “The Senate has an opportunity to get this right and I hope they seize it – our standing as a global leader is directly dependent on the strength of our patent system and its ability to support innovative enterprises of all sizes.”

In part 1 of the interview we discussed why he choose McDermott, what it was like working for David Kappos and working with Federal Circuit Judge Ray Chen when he was Solicitor at the USPTO, and the appointment of Michelle Lee to be Deputy Director of the USPTO. In part 2 of the interview, which appears below, we discuss the new ethics rules adopted by the USPTO, the future of the USPTO, patent reform legislation, abusive patent litigation, and what the AIA was attempting to achieve relative to post grant patent challenges.

Patents and patent reform has been in the news, even the popular press, on an increasing basis. The issue of patents generally and patent litigation specifically has been the subject of intense debate over the last 8 years. Congress passed the America Invents Act (AIA) in 2011, with the bill being signed into law by President Obama on September 16, 2011. The overhaul of U.S. patent law was extraordinary, but not all of the parties involved were happy. Some thought the law went too far in some ways, others thought the law did not go far enough. Despite the AIA being the most significant change to patent laws since at least 1952, Congress is considering further reforms again, with the House of Representatives already passing the Innovation Act (HR 3309). Companion legislation in the Senate is likely to move forward during Q1 2014.

I prophesy that the best we can hope for is a Bilski-esque vague instruction (wherein our top court opined that some business methods are patentable, citing the machine or transformation test as one viable test, without pointing to other valid tests and without enlightening the confused public.) The Court is once again likely to limit software patentability in some arcane way that harms job creation and stifles economic growth. The bright side is that the Court’s failure to protect our largest growth industries may help spur the legislative branch into further action. A decade of intermittent patent reforms has created a permanent cadre of patent lobbyists very willing to focus their considerable efforts and talents on a new patent issue. It would be advantageous to the patent system if that attention were productively channeled to specifically include our emerging technologies in our patent statutes, and to legislate patent eligibility in a manner that treats 101 as the broad filter it was intended to be, while employing the other patent statutes, such as 112 and 103, to correctly provide the narrower filters.

2013 turned out to be a very big year for IP, and especially patents, and the year took a course that few would have predicted this time last year. At that time, the senior team at the PTO was primarily focused on the imminent departure of our then-boss, David Kappos, and the end of what had clearly been an extraordinarily active and successful tenure. The AIA had been almost entirely implemented, the new Patent Trial and Appeal Board was up and running, and most of us expected 2013 to be focused on implementation and execution of the AIA and the other initiatives that had been set in motion under Director Kappos.

Dean Kamen: “I have a lot of concerns [that H.R. 3309] will serve to dramatically increase the barriers – especially for small inventors – to be able to get and protect their intellectual property, which as a consequence will prevent the public from getting access to what should become the next generation of great technology that will deal with all issues – health care, environment and education…If anything this country should be finding ways to strengthen the patent system in the global competitive environment, not make it harder to get and protect intellectual property. We need to add incentives, not add barriers.”

“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.”

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.