US Congress may act again on patent reform

by DLA Piper
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The Leahy-Smith America Invents Act (AIA), enacted in 2011 after three different US Congresses considered various iterations of the legislation, was the most sweeping reform of our patent system since 1952.

But since its enactment, calls have arisen in certain quarters for even more reform. The AIA, some commentators say, did not go far enough to combat patent trolls. This is true, they say, even though the AIA authorized the US Patent and Trademark Office to create the new inter partes and “covered business method patent” post-grant review proceedings that the former Chief Judge of the Federal Circuit has described as essentially having no purpose other than to eliminate patent rights.

Those who want more reform may get it. In December 2013, with overwhelmingly bi-partisan support, the House of Representatives passed HR 3309, the so-called Innovation Act. Compared to other substantive legislation like the AIA, the Innovation Act raced through the House in less than seven months, having been first introduced by Representative (and Chairman of the House Judiciary Committee) Bob Goodlatte (R-VA) as a “discussion draft” in May 2013.

Trolls targeting the little guy

Recent interest in patent reform can be traced to the behavior of a few “bad egg” patent plaintiffs made famous by the mainstream press for targeting the “little guy.” For example, MPHJ Technology has, so far, sent more than 16,000 letters demanding licensing payments to mom-and-pop users of systems that scan documents to e-mail, rather than to the manufacturers of those systems. Similarly, Innovatio IP Ventures demanded payment for use of Wi-Fi routers in the more than 13,000 letters it sent to coffee shops and small-chain hotels and motels, rather than to the manufacturers of the routers those businesses were using.

As passed by the House, the Innovation Act attempts major reform on patent litigation in four main ways: 1) it heightens the pleading requirements for patent infringement cases; 2) it institutes “loser pays” fee-shifting; 3) it limits discovery before a claim construction ruling is made; and 4) it allows a suit against a customer to be stayed in favor of one against a manufacturer.

Only after the House passed the Innovation Act did the US Senate begin to seriously consider similar reforms. However, those efforts have now completely stalled, as Senator Patrick Leahy (D-VT), co-author of the AIA, has removed the leading Senate patent reform bill, S. 1720, from the Judiciary Committee’s agenda. Absent further Senate action, this most recent round of patent reform may be at its end.

 

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DLA Piper
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