Marathon Patent Group

Go Slow on Patent Reform

March 8, 2015

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Go Slow on Patent Reform

Patent reform, like Mount Vesuvius, tends to erupt at irregular intervals, with long periods of dormancy in between.

Volcanic eruptions can be constructive -- ash enriches the soil on the slopes of Vesuvius so that local farmers can grow three crops per year.

However, volcanic eruptions can also be destructive – as the citizens of Pompeii learned.

So it is with patent reform.

Sometimes patent reform “eruptions” are constructive, as in 1952, when the Patent Act created the modern age of patents, and in 1982 with the creation of the Court of Appeals for the Federal Circuit as a specialized forum for patent cases. In some cases the patent reform “eruptions” are harmful, as in 2011 when Congress passed the American Invents Act (AIA). The AIA introduced several new ways to challenge the validity of patents administratively at the patent office, with a lower standard of evidence than required in court. This has introduced a lot of uncertainty for patent owners, who now don’t know how strong their patents are until after they’ve been challenged at the patent office. 

The reform movement hasn’t stopped rumbling since the AIA was passed, and all three branches of government have been shaking things up.

  • The Supreme Court heard more patent cases in the last year than it heard in the decade before.  Some decisions, such as Alice v. CLS, are having a major impact on how patents are granted and enforced. (See Did the Supreme Court Intend to Kill Software Patents? on the IPNav blog.)
  • The White House backed new legislation and announced new executive actions in response to “abusive” patent lawsuits.
  • Congress introduced a series of additional patent bills… none of which became law.

But Congress isn’t giving up yet.

On February 5, Representative Bob Goodlatte (R-VA) reintroduced the Innovation Act, now designated as H.R. 9 and essentially identical to a previous bill that passed the House in December, 2013.

The original bill was highly flawed, and the new one is equally problematic; a detailed critique can be found here.

The bill ostensibly targets “patent trolls” -- companies that take advantage of the fact that it’s cheaper to file a patent infringement lawsuit than to defend against one.  Sometimes, these companies essentially “extort” settlements based on weak patents or highly questionable claims of infringement.

The major provisions of the Act include:

  • enhanced pleading requirements (requiring additional information about which claims in which patents are allegedly infringed by which products)
  • fee-shifting (making the loser pay the winner’s legal fees)
  • joinder (adding anyone with a financial interest in the outcome as a party to the lawsuit)

Reforming pleading requirements is a sensible way to fight abuses without punishing non-abusive patent holders.

However, the other two provisions would make it more difficult for individual inventors and small companies to protect their intellectual property rights – especially when faced with infringement by big companies with deep pockets.

Not surprisingly, large technology companies that have been forced to pay patent owners for using (i.e., stealing) their technology are behind these “reforms.”

The Innovation Act is an example of destructive patent reform.  Fortunately for patent owners, there’s a more constructive version in the works.

Senators Chris Coons (D-DE), Dick Durbin (D-IL) and Mazie Hirono (D-HI) recently introduced the STRONG Patent Act.

The STRONG Patent Act is far more favorable to patent owners than the Innovation Act. Gene Quinn of IPWatchdog posted a summary of the key provisions of the proposed bill here.

The provisions of the STRONG Act include:

  • requiring more information from patent owners who file lawsuits alleging infringement
  • giving the FTC greater powers to target those who send fraudulent or misleading demand letters alleging patent infringement
  • requiring the Patent Office to use standards similar to those used by courts in determining patent validity (rather than the current lower standard)
  • making it easier for patent owners to collect damages in the case of willful infringement

Even though the STRONG Patent Act contains several provisions favorable to patent owners, we believe the best thing for the innovation ecosystem in America today would be to go slow.

Every time patent law is changed – whether by the courts or the legislature  – it takes a while for the changes to be understood and implemented. 

The AIA and cases like Alice have already significantly reduced patent litigation -- and their full impact is not yet clear. 

Constant changes – including changes in the law -- lead to uncertainty, and it’s often said that markets hate uncertainty.

It could be that further patent reform right now would be fixing a problem that no longer exists, fixing the wrong problem, or causing new problems.

It’s time for patent reform to go dormant, to let things settle down for a while. Patents have played a vital role in supporting America’s position as the most innovative country on the planet. Let’s not harm our innovation infrastructure by making excessive changes to a delicate system.