In-house counsel take on patent reform

More than 100 in-house IP attorneys and company executives shared insights and ideas on the current patent reform efforts in Washington

At RPX, we are great believers in the power of collaborative action. Our network was formed as a united response to widespread patent risk, and an ethos of sharing resources informs nearly everything we do. For example, at RPX's fifth annual conference in early May, we held a group session at which more than 100 in-house IP attorneys and company executives shared insights and ideas on the current patent reform efforts in Washington.

The session started with useful context-setting remarks by Nathan K. Kelly, deputy general counsel for intellectual property and solicitor at the U.S. Patent and Trademark Office (USPTO). Kelly reminded the audience that any and all discussion of patent reform needs to be balanced and take into account the pitfalls that lurk behind the potential gains for the patent ecosystem.

Kelly gave two examples concerning recent Supreme Court cases. He pointed out that the recent Section 285 decisions in the Highmark and Octane rulings may actually end up undermining support for fee-shifting legislation in the Senate. Similarly, mandating a universal Section 112 standard in the pending ruling in Nautilus would weaken the current debate on indefiniteness.

After Kelly's overview of the current legislative and regulatory situation, attendees at the session broke into working groups to discuss three of the main goals of patent reform: strengthening patent quality, improving litigation procedures and enhancing transparency and notice.

The patent quality breakout group summarized its discussion, noting that the Supreme Court has already moved forward on key concerns in this area: claim construction review and software eligibility. Participants noted that briefing in Teva is still open, meaning that corporate counsel still have time to author or join an amicus brief regarding whether the Federal Circuit should be reviewing claim construction for clear error or de novo. Alice, on the other hand, while closed for briefing, will be open to comments on implementation in the USPTO when a decision comes down on the boundaries of Section 101.

The litigation procedure group focused on a number of measures that might provide immediate relief. There was a call for efforts to establish case law that apportionment was the appropriate starting place for a damages calculation. The group discussed that pre-Markman discovery stays, fee shifting for extra-core discovery and mandatory stays during post-grant review could effectively curb litigation costs that NPEs frequently use to leverage settlements.

Finally, the notice and transparency group reported near consensus that real-party-in-interest proposals should be adopted in order to create greater ownership transparency. However, the drafting of the provision would be the key to proper balance. The involvement of state attorneys general in the most egregious assertion letter fraud actions was acceptable to the group, but they were concerned that such involvement might go too far if it started to interfere with the federal judiciary's duty to handle patent cases. Heightened pleading standards in patent cases were seen as the most impactful reform currently being proposed. The participants agreed that greater openness about patent transactions—including the intent of an operating company to sell a patent to an NPE—could give operating companies a chance to reduce the possibility of later litigation, as well as build a market for patent sellers to non-NPE buyers.

Having over 100 in-house IP executives focusing on determining the appropriate path forward for patent reform at this critical juncture is a valuable thing. While as expected there is not uniform agreement on all issues, we were able to find consensus in a number of areas, as well as identify ways to further focus efforts on the most important issues in the weeks and months ahead.

Mallun Yen

Mallun Yen is executive vice president of RPX Corporation. She can be reached at infor@rpxcorp.com.

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