It wasn’t so long ago that President Obama signed the America Invents Act (AIA) into law, on September 16, 2011. As with many complex pieces of legislation that will substantially revise an area of law, the AIA did not become immediately effective. The most dramatic changes became effective in two waves, one on September 16, 2012, and the other on March 16, 2013. The Patent Trial and Appeal Board (PTAB), along with the new post grant administrative proceedings to challenge patents, came into being in September 2012, and the U.S. changed from “first to invent” to “first to file” in March 2013.
Here we are, just over two years from the most significant change to U.S. patent law since at least the 1952 Patent Act, and there are more proposals for patent reform pending in Congress. There are four legislative proposals that are deemed “serious,” and a handful of marginal proposals, which make great sense, but which largely have no chance to be enacted.
With this in mind, we are going to embark upon a series that will summarize the pending patent bills. We being with the Innovation Act (H.R. 9).
The Innovation Act
On February 5, 2015, House Judiciary Committee Chairman Congressman Bob Goodlatte (R-VA) bypassed the IP Subcommittee and reintroduced the Innovation Act, which passed in the House during the 113th Congress, but then failed in the Senate.
The Innovation Act includes fee-shifting provisions, which provide that the loser of patent infringement litigation must pay the attorneys’ fees of the prevailing party unless the district court finds that the positions of the losing party were objectively reasonable. This has been characterized as a presumptive fee-shifting provision, which is an accurate description of what the language of the bill actually says, even if Congressman Goodlatte claims otherwise.
Fee-shifting provisions have been a major stumbling block for the Innovation Act. There also remains an open question about whether fee-shifting is necessary given recent Supreme Court rulings giving district courts broader discretion to award attorneys’ fees, and the reality that a large majority of defendants simply choose to settle rather than fight patent infringement lawsuits to a conclusion, which would be required to obtain fees.
The Innovation Act also contains provisions that would heighten pleading standards on patent plaintiffs beyond what is necessary to institute a patent infringement lawsuit. The Innovation Act also includes the so-called “customer-stay provision,” which seeks to protect customers from patent litigation lawsuits more appropriately brought against the manufacturer of the allegedly infringing product. The customer stay provisions have become another major stumbling block. The Innovation Act defines the term “covered customer” as “a party accused of infringing a patent or patents in dispute based on a covered product or process.” The term “covered product or process” is defined as “a product, process, system, service, component, material, or apparatus, or relevant part thereof, that: (A) is alleged to infringe… or (B) implements a process alleged to….” Thus, it would be possible for large tech companies to stay patent litigation and force patent owners to seek redress from the manufacturers of infringing components or products.
There are some who are starting to wonder whether the Innovation Act has become too controversial. There are even whispers that the Innovation Act may not be able to make it out of the House Judiciary Committee, which would explain why the much anticipated markup and Committee vote has yet to happen. Obviously, there has been a strong headwind against the bill or it would have been voted out well before this. Still, it would be shocking if the Innovation Act does not make it out of Committee given that the same bill passed by a vote of 325-91 in December 2013.
For the latest on patent reform please see Posts on Patent Reform.
Tags: Congress, House of Representatives, Innovation Act, patent, Patent Reform, patents
You share in the PLI Practice Center community, so we just ask that you keep things civil. Leave out the personal attacks. Do not use profanity, ethnic or racial slurs, or take shots at anyone's sexual orientation or religion. If you can't be nice, we reserve the right to remove your material and ban users who violate our Terms of Service.