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.
The Patent Trial and Appeal Board (PTAB) at the USPTO has been striking down patents at an alarming rate, which has prompted Chief Judge Rader of the Federal Circuit to characterize the PTAB as a patent “death squad.” While innovators and patent owners may question whether the PTAB is philosophically motivated to kill commercially viable patents, there is no room for debate when it comes to the results. The AIA was intended to make it easier to invalidate issued patent claims and that is exactly what has happened. The full importance of this is still not known, however, because the PTAB has been in existence, handling these new contested proceedings for only 20 months. The Federal Circuit has not yet weighed in on the first round of concluded cases, which will begin to happen as 2014 moves forward. In short, it was really too early to start tinkering with the massively revised patent system.
Add this to the fact that, during the first quarter of 2014, there was a sharp Decline in Patent Litigation in 2014, and you start to understand why skeptical Senators were listening to opponents of patent reform, some of whom made up to eight trips to Washington, DC to meet with Senators and their staff.
Despite the skepticism in the Senate, and significant questions about whether the legislation went too far and would provide disincentives to innovators, the single event that caused the death of patent reform in the Senate seems to have been the recent Supreme Court decisions in both Octane Fitness LLC v. Icon Health & Fitness Inc. and Highmark Inc. v. Allcare Health Management Systems Inc., which both related to attorney fee shifting, the primary motivator for the legislation in the first place.
The fee shifting provisions of the patent legislation would have made it much easier for a prevailing party to obtain their attorneys’ fees in a patent infringement litigation. But in Octane and Highmark, the Supreme Court significantly altered the legal landscape, making it much easier for prevailing parties to collect attorneys’ fees, regardless of whether they are patent owners or defendants alleged to have infringed. With Octane Fitness, the Supreme Court made it easier for district courts to sanction plaintiffs for bringing meritless patent infringement suits, while Highmark makes it more difficult for the Federal Circuit to reverse district court decisions under the statute. See Easing the Standard for Recovering Attorneys Fees in Patent Cases and Supreme Give Broad Discretion to District Courts. Once these cases were decided on April 29, 2014, hopes of omnibus patent reform faded quickly.
With patent legislation off the agenda in the Senate Judiciary Committee, the calendar is the enemy of those who had been hoping for patent legislation, omnibus legislation or otherwise. There are not many legislative work days left between now and the November election, and as the election gets closer, it becomes less likely each day that Congress will be able to accomplish anything, particularly where there is not consensus within the industry on what Congress should do.
What is clear, however, is that even if the Senate were to pass something, it would not be identical to what passed in the House. The last Senate version was already different from the Innovation Act that passed the House in December 2013. That means whatever the Senate passes would need to go back to the House because Judiciary bills are seldom, if ever, sent to a Conference Committee. This means that if patent reform is not dead, it is all but dead.
Scott McKeown, the primary author of Oblon’s Patents Post-Grant blog, who on May 9, 2014, declared patent reform dead for 2014, put it this way after Leahy’s announcement:
[P]ractically speaking, only a tightly focused bill with widespread bipartisan support could make it through Congress in the remaining calendar year, that is— nothing comprehensive. At most, expect to see a push of narrowly tailored bills directed to abusive demand letter practices.
I suppose I could see something very focused gaining traction, but that would require proponents to cut their losses in this Congress. Such a strategic decision would have to come relatively quickly, or wait until a lame duck session. Even then, I just don’t see patent legislation being enacted in 2014. Regardless, the fight will continue with a new Congress in 2015.
Tags: Congress, Patent Reform, Senator Leahy
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