The enactment of patent reform this year is becoming more likely. The House Judiciary Committee is expected to review a bill, known as the Innovation Act, on June 11 and the Senate Judiciary Committee already reported a bill. The Senate bill is now ready for consideration by the full Senate.
One key part of both bills is that they try to minimize the risk of frivolous lawsuits by non-practicing entities – better known as patent trolls. Yet, there are some concerns with both bills.
The Senate bill, approved by the Judiciary Committee with a 16-4 vote, includes provisions on disclosure, fee shifting, heightened pleadings, stays of suits against customers and provisions to prevent abusive demand letters. Also, the Senate bill would change the post-grant review proceedings at the U.S. Patent and Trademark Office (USPTO).
“The Judiciary Committee has made significant progress in crafting legislative provisions to deter abusive behavior while also trying to protect good faith enforcement activities of patent owners,” according to a statement from Lisa K. Jorgenson, executive director of the American Intellectual Property Law Association.
“The PATENT Act has some useful pieces with respect to patent litigation reform, including heightened pleading requirements and provisions to reduce litigation costs,” Matthew Levy, patent counsel at the Computer & Communications Industry Association, told InsideCounsel about the Senate proposal. “We are very concerned, however, about provisions that were added that modify the inter partes review (IPR) program at the USPTO; IPRs have been an extremely useful tool in weeding out bad patents and stopping patent trolls much more cheaply than a full court case. The changes to IPR that are in the current bill would severely hamper the effectiveness of the program.”
On the other hand, Levy said that “the Innovation Act as it is being proposed by Chairman [Bob] Goodlatte of the House Judiciary Committee does not have those damaging changes. We believe that the support is there for a patent reform bill that leaves inter partes review alone while still addressing the patent troll problem.”
When asked about the Senate proposal, Dana Rao, vice president, Intellectual Property and Litigation, at Adobe, told InsideCounsel, “We’re fairly positive about it.”
But he also raised concerns about changes to the post-grant process under the Senate bill. The proposal will add steps to the process making it lengthier. If the post-grant process is weakened, many major technology companies believe it will help patent trolls.
Rao said he hopes that in a conference after the House and Senate bills are approved, senators and representatives will take the best elements of both bills and make a bill that passes Congress. “That bill will do a lot of good for everybody,” Rao said.
“Patents are an important part of the innovation process,” Rao explained. “Abuse of patents slows down the innovation process.”
On the other hand, Joseph Re, an attorney with Knobbe, Martens, Olson & Bear, warned that some elements of the bill will mean, “Congress is really getting into judicial administration.”
And he warns that the patent reform proposals could lead to some “unintended consequences.” Given that the America Invents Act (AIA) was approved just a few years ago, “we should slow down and see what affects have come from the AIA,” Re told InsideCounsel. “We should be moving a lot more slowly.”
The Senate bill additionally raises the issue of how difficult it should be to bring a meritorious lawsuit on patent cases.
“It’s already very, very difficult to bring a patent case,” Re said. “It’s going to be more difficult.”