Patent Law Practice Center

PATENT Act passes the Senate Judiciary Committee

After a three-hour hearing held by the U.S. Senate Committee on the Judiciary, S.1137, the proposed legislation known as the PATENT Act, was approved to move to the floor of the United States Senate by a 16-4 vote of the Senate committee.

Ahead of the committee’s consideration of the bipartisan Act, Senate Judiciary Committee Chairman Chuck Grassley, Ranking Member Patrick Leahy, and Judiciary Committee members John Cornyn, Chuck Schumer, Orrin Hatch, Mike Lee and Amy Klobuchar released a managers’ amendment, which was approved by the Committee. The managers’  amendment includes technical changes, as well as provisions to address concerns regarding post grant review proceedings.

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Patent Reform in the House of Representatives

The Innovation Act (H.R. 9) has gotten the most publicity in the House of Representatives, but there are several other pending bills in the House, including the TROL Act, which has already been voted out of Committee.

What follows is a summary of the other patent reform bills pending in the House.

The TROL Act

The Targeting Rogue and Opaque Letters Act, more commonly referred to as the TROL Act, was introduced during the 113th Congress and passed the House Commerce Subcommittee with bipartisan support. The TROL Act addresses sending bad faith patent demand letters, clarifying that such activity may violate the Federal Trade Commission Act. The Act defines bad faith as either false or misleading statements or omissions, whether knowingly false, made with reckless indifference to the truth, or made with an awareness of a high probability that the statements or omissions would deceive the sender intentionally. The TROL Act also further authorizes the FTC and state attorneys general to bring actions to stop the abusive behavior, but also provides a good faith affirmative defense. The Act would further preempt any state law or regulation expressly relating to the transmission or contents of communications relating to the assertion of patent rights.

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A Primer on the Innovation Act

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.

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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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