Patent owners have taken control of the patent reform debate in the 115th Congress, but it's not clear yet who's supposed to be listening.
Sen. Chris Coons introduced the STRONGER Patents Act of 2017 last week. By one lawyer's count, the bill would overturn five U.S. Supreme Court rulings from the last 12 years that—depending on your point of view—have dangerously weakened the U.S. patent system or placed a helpful check on “patent trolling.”
During the last two Congresses it's been the technology industry and House Judiciary Chairman Bob Goodlatte playing offense, introducing the Innovation Act with its fee-shifting provision fairly early in the 113th and 114th Congress. The measure was even passed by the House in 2013 but was bottled up in the Senate.
This time Coons, the Delaware Democrat and former in-house counsel at manufacturing giant W.L. Gore & Associates Inc., has fired the first shot. On June 21 he introduced a souped-up version of last year's STRONG Patents Act, aiming to make the Patent Trial and Appeal Board a less friendly forum for patent challengers. (STRONGER stands for ‘‘Support Technology and Research for Our Nation’s Growth and Economic Resilience.” The bill is co-sponsored by Sens. Tom Cotton, Dick Durbin and Mazie Hirono.)
So far there's been no legislative response from the tech industry side. D.C. patent players point to a few possible reasons: The tech lobby may be waiting for the Trump administration to nominate a permanent director for the U.S. Patent and Trademark Office; the House Judiciary lawyer who's shepherded the Innovation Act through Congress, Vishal Amin, is joining the Trump administration as its IP enforcement coordinator. Still others think it's simply a matter of Congress having its hands full with health care, tax reform and other administration priorities.
“With the directorship up in the air, and the administration in sort of growing pains, it may be some time” before Congress tackles patent reform, said Jonathan Stroud, chief patent counsel at Unified Patents Inc.
Peter Harter, a lobbyist and consultant who works mostly with patent owners, is expecting the administration to nominate a PTO director next month. That would set up confirmation hearings for about the same time the Supreme Court considers two momentous challenges to PTAB operations this fall. With the STRONGER Patents Act in play, questions about PTAB fairness should figure prominently at the confirmation hearing. “Hats off to Coons for getting ahead of the curve on PTAB reforms,” Harter said.
The STRONGER Patents Act proposes to, among other things, tighten the claim construction standard and raise the burden of proof in PTAB proceedings to bring them in line with district court standards. It also would provide for interlocutory appellate review of decisions to institute proceedings. In other words, it would flip all of the Supreme Court holdings in last year's Cuozzo v. Lee.
Ropes & Gray counsel Matthew Rizzolo said STRONGER Patents would swing the pendulum more toward patent owners in post-grant proceedings. “Essentially, it seems like a lot of this would encourage challengers to go to district court rather than the PTAB,” said Rizzolo, whose clients include patent owners and accused infringers.
Right now, anyone can challenge a patent at the PTAB under the America Invents Act, but Coons' bill would limit it to entities with a business or financial connection to the patent owners. That could keep out an organization such as Unified Patents that has challenged patents on behalf of industry groups. The bill also provides that if a district court or U.S. International Trade Commission decision finds a patent valid, the PTAB must stand down until the Federal Circuit can rule on appeal.
STRONGER Patents reaches beyond the PTAB as well. By Rizzolo's count the law proposes to overrule at least five Supreme Court decisions from the last 12 years, on such issues as permanent injunctions, induced infringement and divided infringement.
“It's a bit too early to tell whether these provisions have a chance of becoming law or are initial negotiating positions,” Rizzolo said. Senators, he noted, “have their hands full with some nonpatent priorities right now.”
The other wild card is the Trump administration's policy toward patents. Lawyers are still waiting for it to be revealed. “The Trump administration has seemed to hold its cards pretty close to the vest when it comes to patent issues,” Rizzolo said. “Once we get through [issues like health care and immigration], we might get a little more clarity.”
Adobe Systems Inc.'s vice president for IP and litigation, Dana Rao, an active proponent of patent reform for the tech industry, said that with the PTAB working effectively and recent decisions from the Supreme Court such as TC Heartland on forum shopping, the industry has obtained maybe 75 percent of what it wanted.
In the last two Congresses there was a sense that legislators might still have welcomed patent reform legislation in part because it bridged partisan divides. “Right now, I don't know that there's same appetite to take up smaller things that seem safe,” Rao said.
He expects tech and other patent reform groups to turn up the volume in coming weeks in opposition to STRONGER Patents, and possibly in opposition to other rumored legislation that could walk back recent Supreme Court decisions.
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