Professors Urge Congress to Ignore Flawed, Unreliable Data in Patent Debate

On March 10, 2015, 40 economists and law professors signed a letter explaining to Congress that the data that keeps being cited to justify HR 9, otherwise known as “the Innovation Act,” is “flawed, unreliable and incomplete.” The professors suggest Congress proceed cautiously, particularly given the numerous misleading and flawed studies that make “highly exaggerated claims regarding patent trolls.”

As the letter explains, one of the “studies” that is often cited as proof that patent trolls cost U.S. businesses $29 billion a year is pure fiction, has been debunked, and the authors of the study have retreated significantly from their clearly erroneous conclusions. I have explained this issue in detail, as have others.

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Fee-Shifting Provisions Front and Center in Innovation Act

In April 2014, the United States Supreme Court addressed the issue of awarding attorney’s fees under 35 U.S.C. § 285 to successful litigants in a patent infringement proceeding. The decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc., was the primary decision simply because that case was treated first by the Court and formed the basis of the Court’s decision in Highmark, Inc. v. Allcare Health Management System, Inc. Essentially, the Supreme Court in these two cases ruled that an appellate court should apply an abuse-of-discretion standard in reviewing all aspects of a district court’s § 285 determination. Those familiar with the abuse-of-discretion standard know that it is a difficult standard of review, which should mean that district courts will have far more latitude to handle attorney’s fee awards without meddling from the Federal Circuit.

After these decisions by the Supreme Court, patent reform died in the Senate after lopsided passage in the House. Politically, and procedurally, the problem for patent reform in 2014 wound up being that the Supreme Court mooted one of the leading drivers of this round of reform — fee-shifting. But that hasn’t stopped patent reform advocates from once again pushing the Innovation Act in 2015, which is identical to the Innovation Act from 2014 that died in the Senate.

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Key Republicans on Patent Reform in 114th Congress

Over the last several days on IPWatchdog.com, we have published articles introducing the Republicans serving on the House IP Subcommittee and the Republicans serving on the Senate Judiciary Committee. In the coming days, we will publish similar profiles of the Democrats.

Today, we focus on four key players on the Republican side of the aisle that will influence any patent reform efforts – Congressman Bob Goodlatte (R-VA), Congressman Darrell Issa (R-CA), Senator Chuck Grassley (R-IA) and Senator Orrin Hatch (R-UT). Each of the aforementioned Members of Congress are on record supporting patent reform of some kind during the 114th Congress.

Bob Goodlatte (R-VA), Chairman of the House Judiciary Committee.

The primary subcommittee dealing with intellectual property matters in the House of Representatives is the Subcommittee on Courts, Intellectual Property, and the Internet, which is a subcommittee of the House Judiciary Committee. This means that Congressman Bob Goodlatte will have an extremely important role with respect to shepherding any intellectual property legislation through Congress over the next two years. Goodlatte has signaled that he will focus his own energies on copyright reform, deciding to keep any copyright reforms the purview of the entire Judiciary Committee. Still, Goodlatte has shown keen interest in the patent system over the years, including the most recently failed patent reform legislation during the 113th Congress. You can rest assured he will be heavily engaged in the 114th Congress.

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Patent Reform Dies in Senate Judiciary Committee

After many delays in the Senate, Senator Patrick Leahy (D-VT) announced on May 21, 2014, that patent reform is officially off the table for now and will not be considered in the Senate Judiciary Committee. Those in favor of patent reform who read Senator Leahy’s statement, which lamented the lack of consensus within the industry, may have taken false hope from his official statement because he ended by saying: “I hope we are able to return to this issue this year.” The reality of the legislative calendar suggests that revisiting patent legislation this year is a long shot at best. Patent reform in 2014 is all but dead.

At the end of 2013, legislative patent reform in 2014 seemed like all but a done deal. On Thursday, December 5, 2013, the United States House of Representatives passed the Innovation Act by a vote of 325-91. Surprisingly, the Innovation Act (HR 3309) had only been introduced on October 23, 2013, and was marked-up on November 20, 2013. Leading up to the vote in the House, Congressman Dana Rohrabacher (R-CA) said: “This schedule suggests the fix was in.” That was, indeed, how most of the opponents of patent reform felt at the time.

When patent reform bounced over to the Senate, there was much greater interest on the part of Senators and their staff to listen to critics who questioned why another round of patent reform was necessary so soon after the America Invents Act (AIA) passed, which was the most fundamental change to U.S. patent laws in many generations. Indeed, one of the central pieces of the AIA was to usher in new contested proceedings at the USPTO, which would make it more easy to challenge already-issued patents.

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Are Additional Patent Reforms Necessary?

todd-dickinson-aipla-2012-2For better or for worse, Congress hasn’t asked whether additional patent reforms are necessary. Rather, they decided that additional patent reforms were necessary and the only discussion worth having was about the implementation details for that legislation. This ‘legislate first, ask questions later’ approach is evidenced by the fact that the Innovation Act was submitted in late October 2013, marked-up in late November 2013, and passed by the House in early December 2013. Before we were even out of 2013, the Senate held its first hearing on the legislation, a companion bill submitted by Senator Patrick Leahy.

Todd Dickinson, who is the Executive Director of the AIPLA (American Intellectual Property Law Association) and a former Director of the United States Patent and Trademark Office, testified before the Senate Judiciary Committee. Dickinson recommended that Congress take no action now. His argument is persuasive — the America Invents Act requires the USPTO to study the effects of that law, which was a major revision to the patent laws. The report isn’t even due to Congress until 2015. So why rush to make more changes now?

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