Reaction to the Passage of the Innovation Act (H.R. 3309)

by McDonnell Boehnen Hulbert & Berghoff LLP
Contact

As we reported last week, the House of Representatives passed H.R. 3309, the Innovation Act, by on overwhelming margin.  A copy of the final bill can be found here.  The next step is consideration by the U.S. Senate, where on December 17th, the Committee on the Judiciary will hold a hearing entitled "Protecting Small Businesses and Promoting Innovation by Limiting Patent Troll Abuse."  It is likely that the Senate will consider S. 1720, which was previously introduced by Sen. Leahy.  As we have noted in the past, this bill professes to have a similar goal as the Innovation Act, but the two pieces of legislation have several provisions that are not shared by the companion piece, and the provisions that are in common are not necessarily coextensive.  It will be interesting to see what impact the passage of the Innovation Act will have on these discussions.

Nevertheless, the reaction from stakeholders in the industry has been overwhelming since the Innovation Act was passed -- some positive, some negative.  We collect below the reaction of several orgainiziations representing these stakeholders in the industry.

Biotechnology Industry Organization

Biotechnology Industry Organization (BIO)BIO did not support the Innovation Act, even before it was voted on, because it believed that the Act would undermine biotech research and innovation.  As Daniel Seaton noted on BIO's Patently Biotech blog, the Act would ultimately make it more difficult for patent holders with legitimate claims to protect their intellectual property.  In general, BIO supported the goals that the Innovation Act was touted as addressing, coming out in support of "increased transparency" and in opposition of "abusive litigation tactics."  However, because the Act contained certain provisions that were overly broad, BIO believed that the legislation would have resulted in too many unintended and unknowable consequences.  "Provisions in the legislation would erect unreasonable barriers to access justice for innovators, especially small start-ups that must be able to defend their businesses against patent infringement in a timely and cost-effective manner, and without needless and numerous procedural hurdles or other obstacles," BIO stated in a press release.

Mr. Seaton did note, however, that BIO supported three of the amendments introduced on the floor.  First, BIO supported Rep. Rohrabacher's amendment that removed the repeal of 35 U.S.C. § 145, which provides for an appeal of an adverse decision at the Patent Office to a U.S. district court.  Even though these appeals are rare, "there are legitimate instances where such appeals are important and necessary, because one can introduce new evidence that could not otherwise be considered in deciding the patentability of an invention," Mr. Seaton wrote.  BIO also supported and amendment by Rep. Massie, which would have struck the "customer-suit exception" from H.R. 3309, although this amendment was defeated.  BIO believed that this provision was ambiguous, and applied to parties beyond end-users and resellers.  As a result, the provision will invite "piecemeal adjudication" and could result in "systematic delays."  Therefore, as explained by Mr. Seaton, this provision which is supposed to streamline litigation "could end up doing the exact opposite."  Finally, BIO supported Rep. Watt's attempt to amend the "loser pays" provision by allowing district courts the discretion to reduce or deny an award if the prevailing party engaged in "dilatory litigation tactics."  This amendment was also defeated.

Intellectual Property Owners Organization

IPO #2The IPO has not taken a position on the Innovation Act per se, but has been tracking all of the legislative efforts, and has taken positions on some of the provisions found in the Innovation Act in whole or in part.  With regard to the fee-shifting provision, the IPO has taken the position that an award should go to the prevailing party unless the "position and conduct of non-prevailing party was objectively reasonable and substantially justified."  However, the IPO did agree that such fees should not be required "if exceptional circumstances" make them unjust.  In addition, the IPO supports some form or heightened pleading standard for patent infringement.  However, unlike the provision found in the Innovation Act, the IPO instead supports modifying Form 18 to include the identification of at least one claim, a statement explaining the infringement of that claim (or claims), and a statement addressing any alleged indirect infringement.  Moreover, the IPO does support a stay against customers while a suit is pending against a manufacturer.  But, much like with BIO, the IPO believes such a stay should be carefully tailored to avoid unintended adverse consequences.  Finally, the IPO supports expanding the current rules for the disclosure of the real party-in-interest, but only to the extent of including the ultimate parent of the owner.  The IPO opposes multiple mandatory disclosures, and requiring the disclosure of non-ownership interests, such as direct financial interest, exclusive licensees, and other with the right to enforce the patent.

The IPO did oppose two provisions which had been part of the originally introduced bill, but were not included in the final version that passed.  First, the IPO opposed an expansion of the covered business method patent review, which was removed in a Manager's amendment during a mark-up by the committee.  In addition, the IPO opposed the repeal of 35 U.S.C. § 145.

All of IPO's positions with regard to these efforts can be found on its website.

America Intellectual Property Law Association

AIPLA #1The AIPLA did not come out in support of the Innovation Act, but instead "urged continued progress on patent reform to 'strike the right balance.'"  In a press release by the organization, AIPLA Executive Director Q. Todd Dickinson expressed appreciation for the interests and efforts shown by the House in its attempt to improve the U.S. patent system by dealing with certain abusive behavior.  However, even if grateful for the sentiment behind the Act, "there remains a lot more work to be done as it moves on to the U.S. Senate," Mr. Dickinson said.  The AIPLA noted that the bill had improved since its original introduction, including removal of the expansion of the Covered Business Method Patent Review and the rejection of proposed amendments, such as those that proposed a bonding requirement, which would have "burdened small inventors and start-ups."  Mr. Dickinson also noted that the AIPLA looks "forward to continuing to work together with Congress toward a goal of ensuring that any legislation strikes the right balance between restraining abusive behavior while not impairing the legitimate rights of patent owners."

 

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.

© McDonnell Boehnen Hulbert & Berghoff LLP | Attorney Advertising

Written by:

McDonnell Boehnen Hulbert & Berghoff LLP
Contact
more
less

McDonnell Boehnen Hulbert & Berghoff 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):
hide

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.

Security

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 info@jdsupra.com. 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: info@jdsupra.com.

- 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.