Momentum Continues on the Hill with Two New Patent Reform Bills
Traditionally, D.C. slows down over the summer months. This year, that is not the case with patent reform. Two new bills have already been introduced since Congress returned from its July 4th recess.
The first, a comprehensive bill called the Patent Litigation and Innovation Act, was introduced by Reps. Blake Farenthold (R-Texas) and Hakeem Jeffries (D-N.Y.). It includes many of the types of reforms we've been talking about, such as:
- Heightened pleading: Requiring patent holders to explicitly make its case when it files by specifying which patents and claims are at issue, as well as exactly what products allegedly infringe and how. It also requires patent holders to remove the veil of secrecy and specifically identify who is behind the action—not just the patent's owner, but everyone who stands to financially benefit. This kind of transparency is long overdue, and we are encouraged to see it in the proposal.
- Protection of end users: Allowing an "interested party"—such as the manufacturer or supplier of equipment—to intervene on behalf of its customers. More importantly, upon request, any underlying case against the consumer would be stayed, essentially put on hold, until the "interested party" finished its case. While this type of protection is good for consumers, we wish the bill would go further and create immunity for end users who use off-the-shelf technologies; there is no reason a consumer should find herself facing any kind of liability for using commonly available technology for its intended purpose.
- Stay of discovery: Shutting down expensive and often harassing discovery until the court has ruled on certain motions, such as a motion to dismiss. This is important because it gives defendants a powerful tool to dispose of cases early before the legal fees and court costs really add up.
- Sanctions for abusive litigation: Requiring courts to include a record of each party's compliance with the rules of litigation. Currently, Rule 11 of the Federal Rules of Civil Procedure requires that parties behave appropriately during litigation—the provision in this bill would require the court to make relevant findings even if neither party asserted a violation of that rule. Presumably, this is intended to limit bad-faith lawsuits; we think a fee-shifting provision like the SHIELD Act would be a more effective tool to do the same thing.
The second bill, The Stopping the Offensive Use of Patents (STOP) Act, is, in part, a companion to a bill introduced in the Senate by Sen. Chuck Schumer (D-N.Y.) earlier this summer. This proposal, introduced by Reps. Darrell Issa (R-Calif.) and Judy Chu (D-Calif.), would, like its Senate counterpart, expand an important avenue to challenge a patent's validity at the Patent Office. A couple of things make this type of challenge particularly helpful: 1) it gives parties additional arguments to show a patent's invalidity that couldn't be made at the Patent Office previously; and 2) when instituted, it stays any litigation proceeding between the same parties in court. (Currently, courts have discretion over whether to decide to stay cases—discretion that results in nconsistent results.)
The STOP Act also includes a provision requiring the Patent Office to expand access to pro bono legal services to "under-resourced re-sellers, users, implementers, distributors, or custormers of an allegedly infringing product or process." Of course, we would rather these parties not find themselves facing patent litigation at all; to the extent they are, the process should be as painless as possible. Increased access to pro bono legal services is an important element to make that happen.
The proposals in these two bills are largely litigation-based and, when taken together, would go a long way toward making life more difficult for patent trolls. But, as with all types of legislation, it appears we've now reached the sausage-making phase—lots of back-and-forth between members of Congress and haggling over small details. These bills join at least five others currently pending in the House and Senate, not to mention five executive actions the President has promised to take. We've distilled some of the most important themes—and what we think might actually work— on our new Legislative Solutions for Patent Reform page.
We don't think Congress alone can fix this problem. (Congress of course has the constitutional power to do it; we're less certain about the political will.) But Congress can make the patent system a lot better, and when coupled with President Obama's orders, the FTC's troll investigation, and (fingers crossed) the continued interest from the Supreme Court into what is and what isn't patentable, we just might be able to get somewhere. The time to fix this problem has long since passed. We're encouraged to see real momentum toward making that happen and remain cautiously optimistic.