Patent Law Practice Center

A patent reform conversation with Senator Coons and Congressman Massie

On Wednesday, October 7, 2015, I moderated a live Google Hangout with U.S. Senator Chris Coons (D-DE) and Congressman Thomas Massie (R-KY). The conversation took place in Senator Coons’ office in the Russell Senate Office Building in Washington, DC. Our conversation, hosted by the Innovation Alliance’s save the inventor campaign, focused on the major pending patent reform bills – the Innovation Act (H.R. 9) in the House of Representatives and the PATENT Act (S. 1137) in the Senate.

The first question I posed to Senator Coons and Congressman Massie was a broad-based, philosophical question. Unlike with virtually all other issues, patent reform is not a partisan political issue. Allegiance does not break down along party lines, but rather seems to depend philosophically on whether the individual believes patents promote innovation or whether patents hinder the progress of innovation. To start, I asked that simple question. Do patents promote or hinder innovation?

Senator Coons, who is a believer in s strong patent system, didn’t directly answer the question presented, although he did acknowledge that the question is “whether or not you think patents are essential and being able to defend those patents are essential to the vibrancy of our innovation system.” While he did not specifically say that he thinks patents are essential in this exchange, Senator Coons is on record with such views in many different forums. He is also the author and primary sponsor of the STRONG Patents Act, which presents an alternative patent reform that is widely recognized as being pro-patent and pro-innovator.

Coons, who spoke without notes and in a way that demonstrates a deep understanding of the issues, continually reiterated the need for patents to be defendable in court. He said, for instance:

Common across the advocates for a strong patent system in the House and the Senate is a profound belief that this constitutionally created and vital property right has to be defensible…that patent litigation has to remain capable of defending unique inventions, thus the Save the Inventor campaign. And those who are advancing the bills both in the House and the Senate that would change the patent litigation system are gravely concerned about what they view as so-called patent trolls and in the only hearing that we had in the Senate Judiciary Committee to discuss the bill in the current Congress, they really focused in on abusive patent litigation practices that do exist and that are a problem, but that I think can be dealt with more narrowly in a more focused and targeted way that just deals with abusive litigation practices…

On the issue of whether patents promote innovation, Congressman Massie’s response was hardly surprising to anyone familiar with the patent debate and Massie’s history. Massie is an inventor and one of only a few members of Congress to be a patent owner. He comes by his deeply rooted opinions out of experiences as an inventor and struggling entrepreneur. He said:

Well, you don’t have to believe or not believe, right? We’ve got 250 years of history in this country of innovation and we have the most innovation because we have the strongest patent system. The deal that our founding fathers gave us that was different from all the European models was what you create you own. And the charge that our Founding Fathers gave us in Congress was to promote the useful arts and sciences by granting for a limited period of time the exclusive use of an inventor’s works. So what we have to do is to decide, within that charter, how do you promote useful arts and sciences, and for what period of time? There are some people that believe that zero period of time is the correct period of time. That does not work.

Massie would then pivot to explain his own story, which is a very familiar story of an inventor starting from nothing to create a business built on the back of patented technology. Massie explained:

I’m not a lawyer, I’m an engineer. I went to MIT and I studied electrical and mechanical engineering because I love creating and right there in the laboratory and in the labs next to me people were inventing stuff all of the time and the great thing about being there in that hotbed at MIT is everybody wanted to start a company and the way you started a company was you had to go get capital and nobody was going to invest unless you had some intellectual property. So my startup that I spun out of MIT, my wife and I…we started right there in a married student housing dormitory…was licensed from MIT, from the Technology Licensing Office. Then, we went out and got venture capital and they believed in us and they knew we had a chance, but we had this limited period of time to get a return on that investment before the invention became public domain. That’s the great thing about patents. The deal you make with society is I’m going to tell you everything about how to copy this idea, and when my exclusivity lapses, everybody in the world can have it.

The entire video is available via YouTube. For a more complete transcript, please visit IPWatchdog.com.

 

House Judiciary Nixes CBM Extension

On Thursday, June 11, 2015, the House Judiciary Committee held a hearing for the purpose of marking up “the Innovation Act.”

One of the issues that took up a significant amount of time during the first half of the hearing was an amendment submitted by Congressman Darrell Issa regarding a proposed extension of covered business method (“CBM”) review. Those familiar with the America Invents Act (AIA) will undoubtedly recall that CBM reviews were ushered in as one of the three new post grant proceedings that could be used to challenge issues U.S. patents. The program was conceived to be temporary, and is scheduled to sunset on September 16, 2020. Issa’s amendment would have postponed the termination date of the program until December 31, 2026.

Unlike inter partes review (“IPR”), a petition for a CBM may NOT be filed unless the real party-in-interest or privy has been sued for infringement of the patent or has been charged with infringement under that patent. “Charged with infringement” means “a real and substantial controversy regarding infringement of a covered business method patent such that the petitioner would have standing to bring a declaratory judgment action in Federal court.” 37 CFR 42.302(a). Additionally, unlike with IPR, a CBM proceeding can raise issues surrounding both patent eligibility under 35 U.S.C. 101 and sufficiency of disclosure under 35 U.S.C. 112.

Issa stated during the hearing that, at the time Congress passed the AIA, the idea was to create CBM review for a trial period and the program would be extended if successful. Issa is mistaken. The complete name of the process even has the word “transitional” in the title. The entire purpose of CBM review was to allow for challenges to certain financial business method patents in a post grant proceeding that could raise patent eligibility and sufficiency of disclosure. Those issues are off the table in IPR. They can be raised in Post Grant Review (PGR), but PGR is only available to challenge patents that were examined under the first-to-file provisions of the AIA. Thus, Congress wanted to allow for a form of PGR for financial business method patents granted under pre-AIA first-to-invent rules.  Thus, there is a time limit to the useful period of this special variety of post grant review.

“We should be ending [CBM] rather than extending it,” Congressman John Conyers (D-MI) stated in response.

Congressman Collins (R-GA) also explained that he cannot support extending CBM, saying that “a property right should be a property right.” Collins also expressed confusion regarding why this matter is pressing at the moment, saying: “I am confused as to why we are considering the extension of a program that is scheduled to sunset in 2020. Why are we debating this here today… do we really know how CBM will affect our economy… we should be having this debate in 2020.” Ultimately, Collins urged his colleagues to oppose this “premature amendment.”

Congresswoman Suzan DelBene (D-WA) echoed the comments of Collins, but also took issue with earlier comments of those in support of the amendment who said that there was no evidence that CBM has been inappropriately expanded beyond financial services patents. DelBene pointed out that there have, indeed, been instances where the Patent Trial and Appeal Board (PTAB) has been accused of expansively interpreting its own jurisdiction beyond what Congress envisioned when the AIA was passed.

The amendment to extend CBM was defeated by a vote of 18-13. At least for now, it is not in the House bill. If and when the bill gets considered on the floor of the House, extension of CBM could resurface in one way or another.

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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