Patent Reform 2013 – A Discussion Draft

by Dennis Crouch

House Judiciary Chairman Bob Goodlatte has released a new version of a "discussion draft" of proposed legislation focusing attention on "abusive" litigation tactics. In a major way, the Bill is focused on making it more difficult for patentees to enforce their patents and is designed to put additional financial risk on patentees who lose in court. Members of both the House and Senate are looking for constituent input on this topic. Senator Leahy is also likely to distribute a draft bill within the next month or so.

[Download Goodlatte - Patent Discussion Draft]

1. Raising Pleading Requirements for Allegations of Patent Infringement

Under current Federal Circuit precedent, a patentee pleading patent infringement can file a bare-bones complaint that basically only indicates the patent at suit and the general activity by the defendant that leads to the infringement accusation. In Iqbal and Twombly, the Supreme Court generally raised the pleading standards and federal courts now require significantly more factual assertions in complaints than they did a few years ago. However, the Federal Circuit found that patent infringement complaints fall within an exception that allows less-informative pleadings so long as they comply with Form 18 of the FRCP. The court has applied the higher Iqbal standards to other pleadings such as defenses and counterclaims raised in an answer and especially focused on allegations of inequitable conduct.

The bare-bones approach of Form 18 leaves tremendous wiggle. And, patentees typically do not identify, for instance, (1) which claims of the patent are being asserted, or (2) what products or services of the defendant are allegedly infringing. The amendment would essentially tell patentees that patent infringement must be pled with particularity. And, at least the patentee must identify those two important elements listed above (if known). In addition, the proposal in its current form asks for a claim chart showing "where each element of each claim . . . is found within the accused instrumentality" and a description, "with detailed specificity, how the terms in each claim … correspond to the functionality of the accused instrumentality." The complaint would also be required to list all other cases where the patent has been asserted and identify whether the patents at issue are subject to any FRAND commitment.

One exemption that appears throughout the proposal is that these changes do not apply when an innovator drug company is suing a would-be generic manufacturer. Rather, throughout the proposal an exception is made for cases where the cause of action arises under 35 U.S.C. § 271(e)(2) (the typical statutory provision invoked in innovator-generic patent litigation).

Federal courts have been using a "notice pleading" system since the 1930's – requiring a "short and plain statement of the claim showing that the pleader is entitled to relief." FRCP 8. It would be interesting to see some pre-1938 complaints and consider whether the apocryphal tale that "fact pleading" was actually much more comprehensive. But the changes appear to move the patent world into the world of fact pleading. The idea behind notice pleading is to provide the accused with sufficient notice of the claim without unduly burdening the plaintiff or creating overly formalistic rules. However, for at least some cases, the current standard does not provide sufficient notice for an accused infringer to actually understand what the patentee is claiming. In addition to providing better notice, the proposed legislation would also significantly raise the burden of filing a patent infringement complaint.

The statute also requires that the Judicial Conference propose rules that would eliminate Form 18 as it stands and create a new form that complies with the new factual pleading described above.

How the courts will likely solve this problem before Congress takes action: The courts recognize that the current pleading standard is too low in patent cases (including a likely majority of Federal Circuit judges). To deal with this the court basically has two options: (1) amend Form 18 through the Judicial Conference procedures; or (2) decide that the court is not bound by Form 18.

2. Award Attorney Fees for Prevailing Parties – And Against All Interested Parties

The new bill creates a presumption in favor of attorney fees being awarded to the prevailing party. Unlike other proposals during the past couple of years, the discussion proposal here is not overtly biased against patent assertion. Rather, the attorney fee statute (§ 285) would require courts to award "reasonable fees and other expenses" to the prevailing party "unless the court finds that the position [of the losing party] was substantially justified or that special circumstances make an award unjust."

Now, in order to ensure that patent holding companies are able to pay as losing party, the provision allows for attorney fee recovery against "interested parties" that have been joined under new provision 299(d). Under 299(d), interested parties include assignees, anyone with a right to sue, anyone with a right to sublicense, and anyone with a direct financial interest in the patents. However, neither ordinary contingency fees attorneys nor equity owners of the patentee qualify for joinder despite their obvious financial interests.

3. Limit Discovery in Patent Cases.

For many reasons, patent lawsuits are hotly litigated and the discovery process is long+expensive. The discussion bill provides for particular limits on discovery prior to claim construction. Under the proposal, a court would be barred from allowing discovery prior to a claim construction decision (except for discovery necessary for claim construction).

In addition, the bill would require the judicial conference to propose a number of limits on discovery that have the potential of significantly changing the process of patent some litigation.

4. Additional Initial Disclosures for Public Release

Under current law, information on each patent lawsuit is sent to the USPTO and placed on public record there. The proposed legislation would extend that program by requiring the patentee in an infringement lawsuit to disclose (1) any assignees of the patent; (2) any entities with the right to enforce or sublicense the patent; (3) any entity with a financial interest in either the patent or the plaintiff; (4) the ultimate parent entity of any of the entities named.

In addition, the law would mandate updates of assignee information for all patents within 90-days of any change of assignee.

5. Exception for Customer Lawsuits that Allows for Stay of those Actions

Sometimes alleged infringement is simply based on the defendant's use of an infringing product. The proposed legislation would require a court to stay actions against such customers pending resolution of the case against the manufacturer. However, the grant of stay requires that the customer agrees that the court decisions in the manufacturer suit will become res judicata have preclusive affect against the customer.

6. Foreign Bankruptcy Effect on US Patent License

Business bankruptcy and reorganization is sometimes mind-bending. Bankruptcy trustees are generally authorized to choose whether to reject or enforce (assume) any of the contracts that were binding on the debtor at the time of bankruptcy filing. However, the Bankruptcy code significantly reduces that power when the contract involves the a license of the debtor's intellectual property rights. 35 U.S.C. §365(n). One issue that has arisen lately is the impact of foreign bankruptcy on the debtor's US intellectual property rights holdings. The proposed bill protect the creditor-licensees in those cases so that an IP owner's foreign bankruptcy cannot be used to unilaterally cancel one of its licensee's US IP rights. To be clear, 365(n) applies to US IP rights, but not Trademark rights or state-law rights other than trade secret rights.

84 thoughts on “Patent Reform 2013 – A Discussion Draft

  1. Yes I think weve got to reduce discovery costs drastically to get the issue settled and the patentee paid before the incentive to create is destroyed these things have been draging on for 15 to 25 years rediculious limit the case time to 6months from file to verdict. Also limit the amount the biggest pockets litigant can spend and start a maximum trial cost for either side to level the playing field

  2. ‘abusive litigation tactics’large infringers definition of ”abusive litigation tactics’:when we are suedJust because they call it “reform” doesn’t mean it is.”patent reform”…America Invents Act, vers 1.0, 2.0, 3.0…“This is not a patent reform bill” Senator Maria Cantwell (D-WA) complained, despite other democrats praising the overhaul. “This is a big corporation patent giveaway that tramples on the right of small inventors.”Senator Cantwell is right. All these bills do is legalize theft. Just because they call it “reform” doesn’t mean it is. The paid puppets of banks, huge multinationals, and China continue to brain wash and bankrupt America. They should have called these bills the America STOPS Inventing Act or ASIA, because that’s where they’re sending all our jobs.The patent bill (vers 1, 2, 3, etc) is nothing less than another monumental federal giveaway for banks, huge multinationals, and China and an off shoring job killing nightmare for America. Even the leading patent expert in China has stated the bill will help them steal our inventions. Congress passed it and Obama signed it. Who are they working for??link to usatoday.com…Patent reform is a fraud on America. Congress and Obama are both to blame. This bill will not do what they claim it will. What it will do is help large multinational corporations maintain their monopolies by robbing and destroying their small entity and startup competitors (so it will do exactly what the large multinationals paid for) and with them the jobs they would have created. They have already damaged the US patent system so that property rights are teetering on lawlessness. This bill will only make it harder and more expensive for small firms to get and enforce their patents. Without patents we cant get funded. In this way large firms are able to play king of the hill and keep their small competitors from reaching the top as they have. Yet small entities create the lion’s share of new jobs. According to recent studies by the Kauffman Foundation and economists at the U.S. Census Bureau, “startups aren’t everything when it comes to job growth. They’re the only thing.” Meanwhile, the large multinationals ship more and more jobs overseas. This bill is a wholesale destroyer of US jobs. Those wishing to help fight this bill should contact us as below.Small entities and inventors have been given far too little voice on this bill when one considers that they rely far more heavily on the patent system than do large firms who can control their markets by their size alone. The smaller the firm, the more they rely on patents -especially startups and individual inventors. Congress and Obama tinkering with patent law while gagging inventors is like a surgeon operating before examining the patient.Those wishing to help fight big business giveaways and set America on a course for sustainable prosperity, not large corporation lobbied poverty, should contact us as below and join the fight as we are building a network of inventors and other stakeholders to lobby Congress to restore property rights for all patent owners -large and small.Please see link to truereform.piausa.org… for a different/opposing view on patent reform.link to facebook.comlink to piausa.wordpress.com link to washingtonexaminer.comlink to hoover.org

  3. I would love any bill that required patent infringement plaintiffs to play their cards upfront: infringement contentions and claim construction. Patent infringement is strict liability. Patents are written ex parte of the accused. And there’s almost no evidence of actual copying or of bad faith misappropriation. I can think of no other area of law where the benefit of the doubt is against the accused who was otherwise uninvolved.It never ceases to amaze me that courts and folks on sites like patentlyo.com think that there is some fairness in the current pleading standards, heightened invalidity standards, and the mechanics of claim construction in modern patent litigation. It’s flat out stupid.It puts the accused infringer behind the eight ball on both infringement and invalidity. For the savvy patent plaintiff, patent litigation can be an elaborate shell game that makes even “slam dunk” defenses expensive to maintain. It tilts the scales in favor of the plaintiff at least in the early (and expensive) part of the game.As in-house counsel, the costs of even addressing “stupid” patent demands (which is like 95% of them) exceed our annual spend on prosecution and that’s not counting internal time and executive time. Somewhat against my own interest, I would love, love, love to see a decent patent come across my desk.

    1. Why do patentlyo folks like this system?Every stupid troll suit = a plaintiff patent attorney + a defendant patent attorney.As stupid troll suits increase and the verdicts hit the news, more people want to be trolls = more patent filings, reexam filings, etc. (more patent prosecution work across the board). Patent troll sues large company, large company has to hire more in house counsel to deal with this problem = a job for you.Looser is the US economy, the winners are patent attorneys everywhere in the US.Now you understand why patentlyo folks like this system. Maybe you will start liking it too.

  4. Does anyone know why there has not been an “adverse possession” law entered for patents? That is, if you don’t use the patent, someone else can? Similar to real property? Or, if there has been a discussion around such a law, where has it gone?

  5. So, what is the deal with all the apparently new posts on the left of the homepage, but I can’t see any of those posts?

  6. The more I think about it, the fairer I think it would be to permit the defendant to bifurcate the trial into infringement/damages vs. invalidity. It makes common sense. A defendant shouldn’t have to go to the expense to invalidate a right bestowed on another by the federal government before figuring out whether they are actually infringers. Plus, this would allow the defendant to go through the PTO (at $200K) to try and get the patent invalidated in parallel with the infringement trial, which could go fairly quickly without invalidity at issue and it would force the plaintiff to commit to a claim construction for invalidity.

  7. Someone was listening about “double patenting.” Rather than rely on 101 or something else, they draft adds a new 106 that treats a prior patent with a common inventor as 103 prior art if the reason that is not prior art is an exception under 102(b)(2). This was wise, because the original Supreme Court cases treated the first issued patent as prior art to the second to issue, regardless of filing dates, on the basis of an implied admission that the first to issue was invented prior to first filed. Since prior invention was intended to be removed as a statutory basis for prior art under 102, this left only 101 as a possible statutory basis for double patenting. Allowing 101 to provide a source of prior art might have very unfortunate consequences for a first to file system.

  8. I think discovery reform should be the highest priority. Discovery is by far the biggest reason why patent litigation is so hugely expensive. A single deposition of an expert, requiring travel for counsel, can easily run well over $100,000 in total costs for the parties.

      1. These experts can charge $500 or more an hour in some instances. The attorneys in the case have to be paid to teach the expert what the legal and factual issues are in the case. If the issues involve prior art, then the expert has to familiarize themselves with that art as well as any other evidence that they will be asked to opine on. Then they have to write an expert report that the attorneys in the case need to review and be comfortable with. Then they have to practice being deposed, again with the attorneys (each of whom also charges $300 – $1000/hr). A couple weeks of work and you can see how the bills add up really fast. As you know, these experts can sometimes make or break the case for a party depending on how awesomely or horrible they perform when the stage lights are turned on.

            1. Well if you want to try to reform those kinds of things and hopefully bring average trial cost down to about 100k or so then perhaps I’d be on board NWPA. But frankly I don’t think there is the political will to gut all that.

  9. “To deal with this the court basically has two options: (1) amend Form 18 through the Judicial Conference procedures; or (2) decide that the court is not bound by Form 18.”Dennis: You will have to explain to me how option 2 is a real option. Rule 84 says that the Form complaints “suffice under these rules.” Period. Now, the CAFC, at times, has shown a willingness not to be too bound by that “binding precedent of the Supreme Court” stuff, but holding that an unambiguous, written Rule of Civil Procedure (Rule 84) does not bind the CAFC would be an interesting one even for them. Even their usual excuse for ignoring generally applicable legal rules governing civil litigation — “teh patent law is totally specialz and Congress appointed us teh kingz of it” — wouldn’t work here as Form 18 is the form complaint for, you know, “patent infringement.”

    1. Right. I see that my language did not impart my meaning. A basic avenue around this would be for the court to hold that Form 18 applies in the simple case where it is clear from surrounding circumstances what claims are going be asserted and what products are being charged with infringement. However, the court could find that the form does not apply to all patent cases because some cases have unique circumstances and complexity.

  10. Settlements can avoid the fee shifting. But if one side thinks they are going to win, the amount of attorneys fees is a pot of gold sitting there to be had with a win. This could prevent settlements, or alter the landscape in interesting ways.Claim construction is critical in patent cases,and often determines the outcome. It is good to hold down costs until that is done. As part and parcel, if the claim construction issues are close, the courts should provide for interlocutory appeals before any further expenses are incurred.

    1. For example, fee shifting will incent, IMHO, contingency fee cases because the patentee will recover his fees. It will also allow the patentee and his firm to spend like there was no tomorrow because not to do so might be penny wise.

  11. Although it sounds scary, the attorney fee provision shouldn’t be that much of a problem in practice. If a claim isn’t substantially justified, then it shouldn’t have been raised in the first place. Any counsel that can’t show substantial justification shouldn’t have been hired.

    1. Right. And it is going to drive up litigation costs as both sides,but certainly the patentee, spend even more not to lose.

      1. At least initially, it will certainly keep more patent litigators employed to avoid being the test case. However, I think that the long-term effect will simply be more conservative litigation positions. This should affect patentees more because I believe that they are currently more likely to take more questionable positions. However, once this issue settles, I suspect that fees wouldn’t be shifted in most cases, although it will be more than currently.

        1. Conservative is right. And this will extend back in time to sending out notices of infringement. If they are in anyway unjustified, I’ll bet there will be consequences.When I was head of IP for a large company, I could never get lawyers for patentees to even give me a decent claim chart showing infringement of at least one product. Not once. Never. Those days will soon be gone.

  12. If these proposal were enacted it would be ‘Game Over’ for innovators. Patents would be useless. No one would assert their patent rights, and most of the readers of this blog would need to change their careers.

  13. I’m not sure where to begin. This bill would destroy an asset class, present an enormous obstacle to innovation, and provide a very substantial payoff to large corporations.The fee shifting portions are contrary to the American system, would purport to require the loser to pay the other sides attorney’s fees, including “expenses” (obviously broader than just “costs” and would include expert fees, travel, etc.), which would allow large corporations to easily starve out smaller companies, start-ups, and competitors, to say nothing of individuals, universities, and research groups. And that theme is consistent throughout. The discovery provisions are absurd. Other than “core” discovery (whatever that means), the requesting party would have to pay for the discovery it seeks, demonstrate the financial capacity to do so, post a bond, and such payment would include the other side’s attorney’s fees. Various other obstacles are set up to preclude discovery, such as a stay before Markman (other than claims construction discovery), demonstrating “good cause” for some information, etc. Moreover, as any lawyer that practices in this field knows, the pleading requirements required in this bill, for most patent cases, are implausible. In addition, the patentee would have to, effectively, provide its claims construction position and discuss “how” a product functions and infringes, etc., all without any discovery, presumably until after Markman.The joinder provisions are equally baseless and, frankly, embarrassing. A privately-held company now has to disclose in a public filing who its shareholders are? Their stakes? Additional information? Finally, it’s fascinating that this bill requires the plaintiff to provide (and plead) information that a defendant gets in discovery, whereas the plaintiff is entitled to no discovery until much later in the case and then has to pay for much of it.

    1. the patentee would have to, effectively, provide its claims construction positionHow can a patentee bring an infringement suit without having an informed, reasonable belief about the scope of its own claims? Requiring such information to be provided with particularity at the complaint filing stage can hardly be considered a “burden”.

      1. Because there is a process and discovery for claims construction, yet this bill would require the plaintiff, but not the defendant (e.g., in their answer) to provide such information. I don’t believe I’ve ever seen a more one-sided bill in my life.This bill effectively requires the plaintiff to try its case in its complaint, which is contrary to our system and every other type of case. And if that isn’t bad enough, the bill makes no such requirement for the defendant in its pleadings.

        1. there is a process and discovery for claims constructionThat assumes there is disagreement about the scope of the claims. If the patentee believes that the proper scope of its claims is “the world and everything in it” then I’m prepared to accept the patentee’s construction and practice those claims to my heart’s content and advise anyone and everyone to do the same.Again, you’re the patentee. It’s your patent. You can read the claims. When you read them, they must make some sense to you or you wouldn’t be filing a lawsuit. As the patentee, what do you believe is the scope of the claims? What is your theory of the case? This bill effectively requires the plaintiff to try its case in its complaintThat’s quite an exaggeration. Here’s the relevant portion of the summary: (1) which claims of the patent are being asserted, or (2) what products or services of the defendant are allegedly infringing. The amendment would essentially tell patentees that patent infringement must be pled with particularity. And, at least the patentee must identify those two important elements listed above (if known). In addition, the proposal in its current form asks for a claim chart showing “where each element of each claim . . . is found within the accused instrumentality” and a description, “with detailed specificity, how the terms in each claim … correspond to the functionality of the accused instrumentality.” The complaint would also be required to list all other cases where the patent has been asserted and identify whether the patents at issue are subject to any FRAND commitment.Again, what’s being requested is a reasonably specific declaration about (1) specifically what the patentee believes that it owns and (2) specifically why the patentee believes that it is entitled to haul a defendant into court for “stealing” what the patentee believes it owns. How can that possibly be considered burdensome to the patentee in any way?

          1. You’re just avoiding the points. Of course the patentee has a view about claims construction prior to filing, but the defendant will also have a view. There’s no need for it to be in the Complaint. That’s why there is a process set up. And, yes, I naively assume there will be a disagreement about claims construction.As to the balance, combined with the limits on discovery, the requirement for a claim chart in the complaint, claims construction position, “how” the claim elements are met by the various accused products (all of which must be listed, etc.), then yes, the patentee is effectively having to try his case in the complaint. And if he doesn’t, then the 12b motion presumably will be granted. There is no other field of litigation where the pleading requirements are so onerous.And I would add that, if this is all so simple and fair, why wouldn’t the defendant have all of the same obligations in its answer?

            1. “There’s no need for it to be in the Complaint.”That’s your subjective view. From the defendant’s viewpoint, there is. And the congress seems to be on the other side for now. ” That’s why there is a process set up. “I’m going to be honest, I don’t think that’s why that process was set up. I think that process just happened to get set up as a by product of other processes that needed to be done. “why wouldn’t the defendant have all of the same obligations in its answer?”A good suggestion for adding to the bill. Contact your rep.

            2. You’re just avoiding the points.No, we just disagree. I’m addressing your points and responding to them.Of course the patentee has a view about claims construction prior to filing, but the defendant will also have a view.Not true, certainly not in the typical troll case. Consider: you’re the patentee and you’re looking for someone to sue. We both agree that you must have a reasonable and specific belief about the scope of your claims and a reasonable and specific belief about what acts or compositions are required to infringe those claims.I’m just some guy running a bakery with, e.g., a monitor that displays a list of what kind of bread is available and how much the bread costs. Prior to your filing your lawsuit, I have NO VIEW about your silly patent claims. None. Zero. That’s why the burden is on you. It’s your property, or you believe that it is. The requirement is that you need to articulate your belief first, with enough specificity that I can decide what to do without spending hundreds of thousands of dollars trying to force you to explain your theory of your case to me. And yes you’re going to be stuck with your belief. If that bothers you, then get out the game.That’s the point.

            3. “And I would add that, if this is all so simple and fair, why wouldn’t the defendant have all of the same obligations in its answer? “Nobody has said anything about it being simple. As far as fairness is concerned, however, the plaintiff can have all the time it wants to prepare a complaint, subject only to the statute of limitations. The defendant gets 21 days to file an answer, maybe a few weeks more if everyone is feeling generous.

        2. In other words, it is absolutely essential that the person bringing the complaint have claims that are ambiguous enough for them to switch around their claim construction position, and then be able to do it later on after they complain. /facepalmThis is the kind of thing that arises outside the useful arts.

          1. A lot the posts here are just rhetoric. The scope of the claims is evident from the face of the patent and the file history, as federal circuit law requires. If you are outside the bounds of that, then you are likely in trouble.

            1. Well then, if that’s the case there should be no such thing as claim construction outside the office. Also, I think you meant “inside”.

    2. the plaintiff is entitled to no discovery until much later in the case and then has to pay for much of itRight, because otherwise the patent just becomes a ticket for fishing expeditions, harassment and/or extortion of people who can’t afford the costs of playing patty-cake with the patentee in court. Why do you think the lawyers at Farney Daniels think they can make money off their letter writing campaign based on ridiculously broad junk claims? Being sued for anything is a huge expense but patent infringement is a whole other animal. If the patentee (or its attorneys on contingency) can’t afford the expense of determining the scope of its own claims and understanding who infringes and why the patent is valid given the scope of those claims, then it has no business hauling alleged “infringers” of those claims into court.

      1. We’re talking about this bill, not a letter-writing campaign. As for the balance of your post, if it was just that simple, then there would be no need for a trial or a lawsuit in the first place, because the plaintiff would have proved its case. Again, there are plenty of rules and remedies on the books to deal with bad faith cases. And what of the obligation of a party that makes products to perform due diligence to make sure they aren’t infringing patents. Most companies do none.

        1. “And what of the obligation of a party that makes products to perform due diligence to make sure they aren’t infringing patents. Most companies do none.”Maybe that should be put in a law instead of simply being a result of some tangential statutes.

        2. if it was just that simple, then there would be no need for a trial or a lawsuit in the first place, because the plaintiff would have proved its case.Or the plaintiff will not bring the case because it can’t fulfill the pleading requirements without shooting itself in the face.there are plenty of rules and remedies on the books to deal with bad faith cases.I don’t think the public agrees that those “rules and remedies” are adequate. And that public includes a lot of patent attorneys who have been watching this game play out for many years.what of the obligation of a party that makes products to perform due diligence to make sure they aren’t infringing patentsIn general, members of the public have precisely zero legal obligation to review the status of patents and/or pending claims prior to performing any act or creating any composition. And thank goodness for that. The duty you refer to is one that exists only between parties in business, e.g., shareholders and the companies they own.If I want to start selling cupcakes on my own, I have no “obligation” to determine whether there is a patent on, e.g., a computerized method of keeping track of how much flour is available or when I expect to run out of sugar.It’s entirely up to the patentee to identify infringers and decide whether to sue or threaten to sue those infringers. And it’s not something that should be done cavalierly by greedy Texas lawyers who have decided for themselves that the “downside” to threatening hundreds or thousands of people with lawsuits is “worth it”. That’s one of the reasons why the laws are going to be changed. Who could have expected otherwise?

          1. Well, you’ve certainly made your point. Those that break the law have no obligation other than to lobby fools in Congress with money to avoid their liabilities. Gotcha.

            1. You’ve certainly made your point. Those that break the law have no obligation other than to lobby fools in Congress with money to avoid their liabilities. Gotcha.That wasn’t my point at all. That’s your point and I disagree with it.I doubt I can convince you but I am one of the least sympathetic people on earth when it comes to “large corporations”. I have never worked for one and I hope to never work for one. Large corporations may benefit from this bill but it’s undoubtedly true that far, far, far more smaller businesses will also benefit from the bill. And that great number of smaller businesses that benefit from the bill absolutely dwarfs the number of patent firms and patent holding companies whose profits and schemes may be negatively impacted by the bill.

                1. This comment betrays your complete void of experience in real life IP matters.If I’ve said something that you believe is false, then let me know what that something is and explain how it could be corrected. Otherwise you’re just tossing out insults.

                2. “Large corporations may benefit from this bill but it’s undoubtedly true that far, far, far more smaller businesses will also benefit from the bill. And that great number of smaller businesses that benefit from the bill absolutely dwarfs the number of patent firms and patent holding companies whose profits and schemes may be negatively impacted by the bill.”Wrong. Startups will have no recourse under this bill. There is no way that I would take a share of a case where I had to front 1mil (that I don’t have) to get the complaint with specificity filed, then have another 3mil at risk (defendant’s ‘costs’), and then have only a chance of recovery and a certainty of underhanded litigation tactics meant to drive up costs and drag out the conclusion. You want to make sure that only large corporations (or large holding companies) can assert patents. It’s contrary to the point of the whole system. Are you really that dense, or are you just mindlessly spewing the rhetoric from the hipster sites?

                3. 1mil (that I don’t have) to get the complaint with specificity filed$1 million to file a complaint? Where do you come up with that number?You want to make sure that only large corporations (or large holding companies) can assert patents.No, I don’t want that. Startups will have no recourse under this bill.I don’t follow. What kind of “startups” are you referring to? “Startups” whose business model is shaking down large corporations? It seems to me that “startups” should focus on developing products that people are interested in purchasing. The “startups” can patent those products, assuming they are worthy of patenting. There is no reason that an ordinary infringement complaint should cost $1 million dollars to prepare. If that’s the case, you’re doing it wrong.a certainty of underhanded litigation tactics meant to drive up costs and drag out the conclusionBoth sides engage in such behavior but under the current regime the patentee has all the advantages. That’s what the bill is attempting to address. You can look at it another way: the value of the average patent is going to go down, across the board. That’s what happens when a bubble pops. Quite frankly I think the air is being let out too slowly but apparently that’s the way that all the stakeholders prefer it. mindlessly spewing the rhetoric from the hipster sitesThe “hipster sites”? LOL. Lighten up, Grandpa. The kids are all right.

    3. “This bill would destroy an asset class, present an enormous obstacle to innovation, and provide a very substantial payoff to large corporations.”This bill uses a nuclear bomb to address a problem which a good old fashioned series of Drone strikes would take care of pretty well. That being said, however, the bill would not “destroy an asset class” or, even worse, “present an enormous obstacle to innovation.” Somehow, other countries still do that whole innovation thing without a wildly expensive litigation system and a ton of junky software patents that overlap extensively and thousands of which basically cover [Prior art method of doing X] + “with a super awesome processor based device coupled to a network with a plurality of other super awesome processor based devices wherein the processor based devices also have super capable means for storing things and then processing those things on the super awesome processor based devices to perform method and share method with others.”

        1. Is junky a technical term?Typically used to refer to patent claims that should not have been granted for one reason or another. Let me know if you need a specific example.

  14. You need discovery to plead with specificity most times. How do you know what’s in a circuit or chemical compound before getting the discovery? How do you plead that. These are not fun issues to deal with, much less to have to try to deal with them in the initial complaint.2 stage discovery is actually a great idea. The rest gut the court system, or at least heavily tilt it toward the big players. The small guy can’t afford a loss (literally), but a big corporation can easily eat the plaintiff’s 500k in legal fees. It’s almost a no brainer to try and run the plaintiff out of money, because then he has to pay YOUR FEES TOO, LOL. I represent a number of big players, but we just don’t need this much of an edge.

    1. How do you know what’s in a circuit or chemical compound before getting the discovery? How do you plead that.You hire some scientists to look closely at the product you suspect is infringing. That’s almost always going to be way cheaper than getting through the discovery stage of litigation.

    2. “You need discovery to plead with specificity most times. How do you know what’s in a circuit or chemical compound before getting the discovery?”Buy one and take it apart?

      1. You know how I know that you have ZERO industry experience? The very notion that you can deconstruct a microchip and back map the circuits from the visible layers is comical. I know of one company with that capability, and it costs over 1mil dollars. However, they obviously can’t do digital back mapping (obvious to anyone who actually understands technology).You can tell how a compound is made based on the finished product? LOL.

        1. Oh no, expensive enforcement for some microchips means we need to have bs going on the pleading reqs (i.e. people pleading infringement without a good basis to plead so in the first place) and the possibility that “digital backmapping” is unpossible also bolsters such! Oh noes, oh noes. We just can’t get along without “digital backmapping”!

        2. You can tell how a compound is made based on the finished product?That’s not what you were complaining about earlier. Earlier you complained that you couldn’t tell “what’s in” a circuit or a compound without discovery. That’s a different problem compared to figuring out whether a particular compound or circuit was made using a patented method. Even in that case, however, it’s not unreasonable or unduly burdensome to request that the complaint state with particularity the evidence that leads the patentee to believe that his/her patented method is being infringed.

        3. The very notion that you can deconstruct a microchip and back map the circuits from the visible layers is comical. I know of one company with that capability, and it costs over 1mil dollars.I’m not sure where you are going with this. It seems that you are suggesting that people with patents on circuits should be able to sue other circuit manufacturers first and ask questions later?If you’ve got the skill and resources to design, manufacture, test and de-bug a novel non-obvious circuit then it seems likely that you’ve got the skill and resources to figure out whether someone is infringing your patent on that circuit. Or is your position that most of the key innovations in circuit design these days are being made by “small inventors” who lack the resources to manufacture and de-bug the circuits themselves but who are perfectly capable of filing and obtaining patent applications on the circuits that they imagine would work once someone else fixes all the bugs?

    1. Having read the bill itself, all that is covered are common issues, which essentially means, issue preclusion, not res judicata.

      1. Note, under rules of preclusion by privity, cf., Taylor v. Sturgell, 128 S. Ct. 2161 – Supreme Court 2008 (Second of six different recognized “situations” where preclusion is recognized.), the customer is already bound by the outcome of the manufacturer action with respect to infringement. This would tend to extend that to validity, a common issue. But that is not clear from the text.

      2. Thanks Ned. After looking at the proposed bill again, I agree that you are correct. The form of preclusion created by the provision is more akin to issue preclusion than claim preclusion. And, so my reference to res judicata is wrong. I am going to update the post body itself to reflect this correction.

  15. I think the disclosure portion is a good idea. But, I do not agree with the rest of it. From my experience, a big part of the problem is local rules. Some local rules force the defendant to plead all invalidity contentions upfront (and it is hard to get any added). This often means the defendant gets a giant bill up front with no claim construction and no real chance to assert they are not infringers. And, it is very hard as a patent attorney to make invalidity contentions when you don’t know how the claims are going to be construed. You spend hundreds of hours in contingency planning. You have no idea what the damages are going to be and are terrified that you might miss something and a giant award is going to come out.Why not: allow the defendant to fight non-infringement upfront, and then if they are found to infringe to go for invalidity. And it would make it easier to go back to the PTO for invalidity while infringement would stay at the district court. Infringement without invalidity is a much less expensive trial. Fix the “problem” by dealing with the ground problems. The pleading standard is so high with invalidity (despite J. Lourie’s recent binges) that it doesn’t make sense to couple it with infringement.

    1. Think about it this way: what if your neighbor accused you of building a tree house on their property. Would you want to have to do all the work to try to prove they don’t own the property (patent is invalid) upfront, instead of just saying that I don’t “think” I built the tree house on their property , but to prove it we have to wait for the surveyor results (claim construction and infringement from the jury).It goes against common sense to force someone to try to show the patent is invalid when they don’t even know if they infringe the patent. (And, make sure you understand some of the local rules. They force the defendant to make ALL the invalidity contentions upfront.)Consider: that fixing this problem is fair. It is one of the things that separates patent law from many other types of civil trials. The defendant in a patent case often doesn’t believe they infringe.

        1. Their belief is relevant because that creates the dispute. They may not believe that they infringe (that their tree house is on someone else’s property). There needs to be a finding of fact. Do they infringe or not? (Is the tree house on the other’s property or not).That should happen before the defendant has to go to the expense of invalidating a right bestowed on another by the US Government.

      1. NWPA. As far as your analogy goes, I for one would certainly obtain a survey before suing my neighbor for this type of trespass. With patent cases there is some reasonable amount of due diligence that we should require pre-filing. In general, I think our courts do a pretty good job with “reasonableness” and figuring out what fits for each situation. The problem in the patent context is that the permissive nature of the form complaint (Form 18) has been interpreted as preempting the reasonableness analysis.

        1. Are you suggesting that pre-suit due diligence isn’t already done in advance of filing the case? While there are always some exceptions, this isn’t 2002.And I’m not sure what you mean by form 18 preempting the reasonableness analysis.

            1. Right, but I think you are improperly presuming that, because a patentee need only satisfy the pleading requirements of form 18, that he needn’t satisfy pre-suit due diligence procedures. That’s not the case at all. Rule 11 and several other rules and jurisprudence require such diligence and there are various remedies for those that violate the rules.The fact of the matter is that patent litigation is a mature market. The players all know that flimsy patent cases no longer suffice (has been that way for several years).

              1. Right, I agree with you that, under current law, the pre-filing diligence enforced by Rule 11 is not satisfied simply by complying with Form 18. I’ll see if I can do a quick study of patent complaints.

                1. I’m not sure we are saying the same thing. A lawyer filing a case is required to comply with Rule 11, etc., but such Rule 11 analysis is not required to be in the Complaint. And I see no good reason why it should be. It is attorney work product, etc. IF a defendant complies with the rules, then he may challenge that pre-suit due diligence. There are plenty of more-than-adequate procedures in place (as well as remedies) to deal with bad faith cases. But that’s not what this Bill intends to stop, of course. This Bill’s intent is to cease competitors and smaller players from suing large corporations altogether, regardless of the merits.

                2. This Bill’s intent is to cease competitors and smaller players from suing large corporations altogether, regardless of the merits.What’s your evidence for that? I haven’t seen any statements by the authors or proponents of this bill that would suggest it’s purpose is to shield “large corporations” from all lawsuits, “regardless of the merits.” Nor do I see how the proposed law would have such a drastic effect.Will a few arguably “meritous” patent cases that might otherwise have been brought against “large corporations” not be brought as a result of the bill? Could be. Is that so horrible a possibility that any chances of it happening must be reduced to zero? Or is that just something that, as a society, most of us could pretty much roll with. How many people who make a living by sueing large corporations for patent infringement will be unable to feed themselves or ther families as a result of this bill?

          1. Are you suggesting that pre-suit due diligence isn’t already done in advance of filing the case? While there are always some exceptions, this isn’t 2002.Are you suggesting that this legislation should have been proposed ten years ago?

    2. it is very hard as a patent attorney to make invalidity contentions when you don’t know how the claims are going to be construed.Undoubtedly.As an initial matter, the question to be answered is: how is the patentee construing the claims? What does the patentee believe is the proper scope of the claims? Why does the patenteee believe that the claims are infringed? The patentee is in the best permission to provide this information with particularity. It’s the theory of the patentee’s case, after all. There’s no excuse for making the defendant wait for this information. And it goes without saying that if the patentee is incapable of describing its own belief as to the scope of its own claims than the patentee has no right filing a lawsuit against anybody.

  16. I continue to wonder why these changes are not being applied to all lawsuits and not just patents. Nearly every week bogus share holder actions are filed.

    1. Because they know how destructive these policies would actually be to the rule of law and the reliance of the public on recourse through our legal system.

    2. I continue to wonder why these changes are not being applied to all lawsuits and not just patents. Nearly every week bogus share holder actions are filed.The answer is patent trolls. There is a big difference between a “bogus shareholder suit”, on one hand, and a patent holding company extorting hundreds or thousands of small businesses nationwide with j*nk patents that should never have been granted in the first place.And yes the PTO is partly to blame for this mess. But it was all very predictable. And it was predicted. And the people who predicted it were shouted at and insulted by the stakeholders as being “anti-patent.”Reap the whirlwind.

    3. Bogus shareholder actions, like most federal civil cases, are assumed to be brought by smaller entities against much larger and richer entities. The entire system of expensive litigation without loser pays rules is based on the assumption of deep pocketed defendants.Criminal cases have adapted to the Gideon system because loser pays isn’t considered realistic and defendants are not deep pocketed.Now we have patent trolling where most defendants are being abused and extorted. They don’t have the free cash to spend a million dollars defending themselves, so they have to settle for whatever the troll demands. And as the problem expands we can see that in most cases the extorted defendants have far better claims in fact and law but simply can’t afford to go to trial.That’s no how we want the system to work and that’s why reform is possible.

      1. Are you talking about the settle for $5000 low end trolls or the high end trolls? It wouldn’t make economic sense for a high end troll to sue a company with no revenue.I just gave securities litigation as an example. There are some ADA trolls that go around hitting small businesses for not having wheelchair ramps in their toilets or small school districts for not having some type of new unproven instruction technique for the mentally challenged.Loser pays seems fair to me for both sides.

Comments are closed.