Intellectual Property Bulletin - Spring 2013: Surprising Appetite in Washington for New Federal IP Legislation

by Fenwick & West LLP

On March 16, 2013, the most significant provisions of the America Invents Act (AIA) came into force. The AIA was seen as the most extensive alteration to U.S. patent law in half a century, and was hotly debated over nearly a decade. The changes under the AIA were in some ways fundamental to our patent law, moving us from a system in which the first to invent deserves a patent to the system used in the rest of the world in which the winner of a patent is the first inventor to file a patent application. Particularly in view of the other issues commanding the attention of Congress, commentators suggested that IP issues were not likely to rise to prominence again anytime soon. Those commentators were wrong.

It appears that the stage is set for further major revisions to U.S. patent law in the coming year. In addition, there is a serious call in Congress for a major overhaul to copyright law. There is even a strong push, both from Congress and the Obama administration, to enact a new federal trade secrets act allowing a civil private right of action (currently addressed almost exclusively by state law). These proposals are not just minor technical amendments to a current statutory scheme. They represent instead an interest in fundamentally rebalancing the quid pro quo on which each of these IP protections is based.

The proposal for patent reform is perhaps the most surprising given the recency of the AIA’s enactment. A number of separate patent reform attempts were started during the Spring of 2013.

A proposal by House Judiciary Committee Chair Bob Goodlatte and Senate Judiciary Committee Chair Patrick Leahy was circulated in late May, primarily to address abusive tactics often associated with “patent trolls.” The proposal, styled as a House bill, was quite detailed, coming in at 38 pages. One section provides incentives to settle litigation lawsuits through an award of attorney fees and costs to a prevailing party that offered to settle the case before trial. Another requires transparency in identifying all parties that have a financial interest in a patent; nonpracticing entities often seek to obfuscate ownership for various reasons. Other provisions relate to ownership (including parent companies) and licensing history of patents, again to increase transparency as to the parties who may already have benefits relating to the patents. The draft includes a protection for customer end users as well via a stay requirement, where a patent relates to a product and the patent owner chooses to sue a user of the product rather than its manufacturer. Related provisions call for various studies and public education efforts. One is a study of “asymmetries in discovery burdens and costs,” with an obvious view toward limiting the cost of litigation for infringement defendants; another looks to analyze patent transactions, quality, and examination. A provision calls for enhanced education for small businesses regarding patent exposure. There are also some “improvements and technical corrections” to the AIA, at least some of which may be significant changes; for instance, the manner in which patent claims are to be construed in the new PTO procedures (i.e., post-grant and inter partes reviews).

Senator John Cornyn of Texas provided a previous proposal along somewhat similar lines, called the Patent Abuse Reduction Act. The approach taken in Senator Cornyn’s bill includes a heightened pleading requirement, with a claim-by-claim identification of each “accused instrumentality” (method, system process, etc.), detailing where each element of each asserted claim is found within the accused instrumentality. Like the Goodlatte/Leahy proposal, there is also a requirement to identify licenses pertaining to asserted patents and ownership interests in the patents. This proposal also includes settlement, joinder, and discovery provisions, again intended to limit defendants’ exposure in addressing infringement claims. A previous proposal called the SHIELD Act (fully, the “Saving High-Tech Innovators from Egregious Legal Disputes Act”), introduced in February by Representatives Peter DeFazio and Jason Chaffetz, would have had “loser pays” provisions only for nonpracticing entities.

Representative Ted Deutch of Florida sponsored another bill, also in May, called the “End Anonymous Patents Act” that is solely intended to increase transparency as to patent ownership. Senator Charles Schumer’s proposed bill, again introduced in May, seeks to expand the reach of the additional level of review for “covered business method patents” that he secured as part of the AIA. Under that program, the level of review available for most patents for the first nine months after they are granted is expanded for certain types of patents to last for their entire lifetimes. In early June, Representative Steven Chabot of Ohio introduced legislation, HR 2236, to expand the definition of a “microentity” under patent law to increase the number of startup companies that could qualify for drastically reduced PTO fees.

For context, these various proposed bills emanated from Congress before the Obama administration’s very public push on June 4 to address abuses by “Patent Assertion Entities” (expressly equated in the administration’s report with the typically pejorative term “patent trolls”). The 17-page report, entitled “Patent Assertion and U.S. Innovation,” proposes a host of reforms, ranging from heightened PTO examination standards to reducing the “disparity of litigation costs between patent owners and technology users.” The report also suggests looking for ways to increase the “adaptability of the innovation system to challenges posed by new technologies and new business methods.” The proposed bills have come at about the same time that action at the state level is increasing. Attorneys general in several states have been studying abusive tactics by trolls, and Vermont’s attorney general filed a consumer fraud lawsuit in May against one patent holder for its widespread enforcement activity. At nearly the same time, Vermont enacted legislation expressly aimed at addressing “bad faith patent assertions.”

On the copyright side, activity has been somewhat more consolidated, but no less intense. House Judiciary Committee Chair Goodlatte, before turning his attention to the patent bill discussed above, stated that he will be holding hearings on whether new copyright legislation is called for. Many have advocated for such legislative reform, in view of various advances in technology, as well as the seemingly cumbersome process of addressing unauthorized music sharing and video streaming by individuals through conventional federal court litigation. The Digital Millennium Copyright Act (DMCA) appeared in 1998 based on studies done several years before that, well before many of the technologies now in widespread use for distribution and delivery of copyrighted works were invented. Congress has already begun work in this direction; a House subcommittee scheduled a hearing on HR 1123 on June 6, 2013, regarding amendments to the DMCA to permit consumers to unlock cell phones without approval from their cellular carriers (such attempts might otherwise obviate technical protection measures in violation of the DMCA). There is no publicly disclosed general agenda available for this round of copyright reform, but the range of issues is vast; for instance: the legality of online radio and television technologies; reducing the duration of the copyright term and the amounts available as “statutory damages;” and, creating a small claims court to resolve, for instance, infringement complaints brought by individuals against unauthorized use of their materials online (or perhaps those brought by music companies and movie studios against individuals).

Given the developments in case law and business practices over the past decade, it is widely expected that any such reform efforts in Congress will be met with intense lobbying efforts from both the entertainment industry and the technology sector. Just as the AIA was nearly a decade in the making, the next revision to our copyright law may likewise take many years to engineer. There are numerous signs, however, that Congress intends to start this process.

The trade secret has traditionally been the poor cousin of the constitutionally supported patent and copyright. Although federal trade secret legislation has been in place for some time, both via the Economic Espionage Act and the Computer Fraud and Abuse Act, there has been no federal counterpart to the Uniform Trade Secrets Act, the model law around which most states have formulated their trade secrets statutes. Some significant disadvantages stem from trade secrecy being protected primarily by state law. For instance, it is difficult for the United States to negotiate minimum trade secrecy standards in treaties with other countries when there is no corresponding federal law. It is also sometimes quite difficult, as a practical matter, to bring certain trade secret misappropriation lawsuits against foreign entities under state law, as some service, discovery, and other procedures are difficult if not impossible to employ in the various state court systems.

Last summer, Senators Herb Kohl, Chris Coons, and Sheldon Whitehouse introduced the Protecting American Trade Secrets and Innovations Act (PATSIA, S.3389). This proposed legislation would have added a private right of action under federal law for trade secret misappropriation under certain circumstances. Although PATSIA died with the close of the 112th Congress, it appears poised to reappear fairly soon.

Both Congress and the Obama administration have been closely watching trade secrecy cases involving foreign entities, most notably those bearing some connection with China. In February, the office of the IP Enforcement Coordinator (IPEC) issued a detailed report entitled, “Administration Strategy on Mitigating the Theft of U.S. Trade Secrets.” One of the primary recommendations of the IPEC report was improved domestic legislation. Two pieces of legislation from 2012 were highlighted as steps in the right direction. The Theft of Trade Secrets Clarification Act, S. 3642, closed a loophole in the Economic Espionage Act by expanding its scope to cover not only products, but also services and related activities. The Foreign and Economic Espionage Penalty Enhancement Act of 2012, H.R. 6029/S. 678, increased criminal penalties for economic espionage.

In addition to the report, IPEC opened a comment period in March and April 2013 seeking input on “existing laws related to the enforcement of trade secrets to determine if legislative changes are needed to enhance enforcement.” 78 Fed. Reg. 16875 (March 19, 2013). The comments that IPEC received referred extensively to PATSIA and the need to consider addition of a federal civil cause of action for trade secret appropriation. Numerous reasons were given for supporting such a statute. Some commentators noted that those suffering from such misappropriation were in the best position to bring actions against it. Others observed that the federal government has brought relatively few criminal actions, and only in selected areas, so the criminal provisions have proven insufficient – particularly in cases where foreign actors are involved.

The tone of the IPEC Report was reinforced by the U.S. Trade Representative’s most recent Special 301 Report, issued in early May. The Special 301 Report emphasized the importance of enforcing trade secret rights, and devoted a separate section just to this topic, noting, “This year’s Special 301 Report reflects increased emphasis on the need to protect trade secrets.” The IPEC Report’s call to improve domestic legislation was repeated in the Special 301 Report.

This is not the first time that a federal civil trade secrets provision has been suggested. Several academic and other writers have proposed such legislation for decades. However, it is only recently that the federal government has seriously addressed addition of a private civil cause of action for trade secret misappropriation, similar to that available for patents and copyrights.

IP issues are often overwhelmed by more pressing issues in Congress. It may be that none of these initiatives gets very far in the near term. However, the fact that Congress and the Obama administration are both actively seeking legislative solutions in ongoing patent, copyright, and trade secrecy areas is remarkable. We will be following the developments closely and reporting on them in future issues of the intellectual property bulletin.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Fenwick & West LLP | Attorney Advertising

Written by:

Fenwick & West LLP

Fenwick & West LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.