Next Step in Patent Reform

By Dennis Crouch

With the passage of the Goodlatte Innovation Act (H.R. 3309), attention now moves to the Senate to consider a a roughly parallel bill. Several amendments passed during today’s debate and we’ll address those in a later post.

In the Senate, Senators Leahy (D-VT), Lee (R-UT), Whitehouse (D-RI), and Klobuchar (D-MN) have proposed the Patent Transparency and Improvements Act of 2013 (S. 1720). In a prior essay, I called the Leahy-Lee proposal “more measured and limited” than the Goodlatte bill and “much more narrowly focused on egregious patent enforcement abuses.”

One important element coming through this process is a clear lack of leadership from the PTO. Although former director David Kappos testified against the Goodlatte proposal, his golden air of credibility and executive authority has shifted since joining the Cravath firm. The PTO has been without a Senate-approved director February 1, 2013 and any new (yet unnamed) PTO director is weeks or months away.

33 thoughts on “Next Step in Patent Reform

  1. Even if passed, would the “loser pays” provision actually be effective or change the status quo much? Under Goodlatte’s legislation, I believe attorney fees are not awarded if the non-prevailing party was “substantially justified” in bringing the case. Seems like “close cases” would be substantially justified. What showing is this going to require? Against plaintiffs, perhaps the plaintiff would have to show that his suit was brought in good faith and not objectively baseless. Maybe I missing something, but I feel like many judges out there will feel like the suits brought are “substantially justified.” It will be easier to get fees than it currently is (and the burdens will be shifted), but still not sure how effective it will actually be in practice.

  2. I’m not so concerned with loser pay. In my experience, the accused infringer escalates litigation far more than the inventor. I suspect that loser pay will limit this to a point and may encourage infringers to settle more quickly and at a higher amount.The real problem is 9b and 9f. These have nothing to do with fictitiously evil patent trolls:9b allows issues not raised (that could have been raised) in a post grant review to be raised in a different procedure or in court. This will hurt inventors because an accused infringer will likely use these to daisy chain one after another and extend litigation. 9f means time burned by RCE or appeal in prosecution will not be added to the patent term. That one will really hurt most inventors. These delays are PTO generated and out of inventor’s control, yet the inventor can lose years. One of my patents may lose 9 or more years because of this.

  3. Evidently our IP genius congressfolk have seen into the future and determined that all of the AIA’s post grant proceedings fixed nothing with respect to “low quality patents”. Glad the AIA dust settled before we started gettin’ buckwild on patents again.Patents are the fast food minimum wage war for open source hipsters. So hot for uninformed, populist vitriol right now. At least Goodlatte’s cashing in on it with Google as his top donor.

  4. An acting director surely does not have the power or influence to change minds inside the administration, and that is where minds need to be changed. Had Kappos still been part of the administration, his voice would have been heard and perhaps the administration would have argued restraint to Good Latte (is that spelling correct?).

    1. Ned, do you mean: “An acting director surely does have the power or influence to change minds inside the administration” ?

        1. Ned, whether they listen or not, one well recognized function of the Office (and the leader of the Office) is to advise the Executive Branch and Congress as to patent policy.Obviously, the vacuum there has had dire consequences.

  5. ” Although former director David Kappos testified against the Goodlatte proposal, his golden air of credibility and executive authority has shifted since joining the Cravath firm.”If it ever existed at all. A mirage blowing in the wind. ” The PTO has been without a Senate-approved director February 1, 2013 and any new (yet unnamed) PTO director is weeks or months away.”Maybe all we really needed was for the PTO to get out of the way for a bit. I am surprised though that others here wouldn’t have taken up the banner. Peggy is a capable person.

  6. I am greatly concerned that the “loser pays” part of this bill will eliminate virtually all legitimate infringement suits by independent inventors. Surely our politicians aren’t all for ending independent invention. What can be done to stop this lunacy?

    1. I am greatly concerned that the “loser pays” part of this billNot included in the Senate version.One thing that the anti-troll crowd overlooks is that there is a lot of valid and infringed patents out there. In those situations, a loser pays regime incentivizes lawsuits going all the way rather than settlements — even where the defendant is willing to settle on reasonable terms. Why settle when you can have the infringer pay your attorney fees?

    2. It’s not lunacy. It restores some modicum of fairness.If you don’t have a valid, infringed patent, then why do you get to impose undue costs on an innocent third party? If you do have a valid, infringed patent, then there’s no issue.The current system favors settling with an accuser even with a stupid patent/argument because an accused is ALWAYS going to be stuck with the nuisance value of defending a case. There is almost no chance that a defendant can recover his or her fees absent some misconduct.

      1. “If you do have a valid, infringed patent, then there’s no issue.”You know how I know that you have zero experience in patent litigation?

        1. That’s how you prove that you have no patent infringement litigation experience. In what world do you live in the where those who are right, innocent or infringed should have no fear and win in court. Capital wins more often or not, right or wrong. Why not have loser pay for all lawsuits and not jusyt patent infringement. Why are patents so special. This bill puts all the power with the ologopolies, period. A patent will only have value if it is the property of large corporations. Period.

        2. Three umpires are sitting around talking:The first umpire says “There’s balls and there’s strikes, and I call ‘em like they are.”The second umpire says “There’s balls and there’s strikes, and I call ‘em like I see ‘em.”The umpire that sits on the CAFC says “There’s balls and there’s strikes, but they ain’t nothing till I call ‘em”

        3. If the implication is that there’s a risk a judge goes the wrong way on the question of “substantially justified,” then this is an equally silly statement. As written, the risk of a bad judgment is equally likely on both sides: a defendant advancing meritless defenses might be on the hook for fees too.

          1. My comment was directed at nothing other than your assumption that one “knows” whether a patent is “valid” and “infringed” before filing a suit. There is a reason why the Federal Circuit exists. I will let you in on a secret: District court judges are not super terrific at deciding patent issues.Edit*** Furthermore, these brilliant folks at the district level also get first crack at deciding whether fees should be shifted or not.

      2. The current system favors settling with an accuser even with a stupid patent/argument because an accused is ALWAYS going to be stuck with the nuisance value of defending a case. There is almost no chance that a defendant can recover his or her fees absent some misconduct.That can be said about any type of legal dispute. If you get sued, no matter the validity of the claim, it is difficult to be made whole if you win.You are, however, correct in that the current system favors settlement. A loser pay regime favors litigation since the winner will be made whole, regardless of the amount of the underlying dispute. A loser pay regime also favors the deep-pocketed party, who can more afford to pay the other side’s attorney fees. Should a bond be required to be posted to cover potential attorney fees, this will also place a chilling effect on a small inventor wanting to enforce his/her patent.

        1. *That can be said about any type of legal dispute. If you get sued, no matter the validity of the claim, it is difficult to be made whole if you win.*The overwhelming majority of federal litigation has a deep pocket as the defendant. The plaintiff can be an individual, a giant company, a federal agency, or even an endangered species (advocate). In any case, the defendant almost always has the means to defend itself without worrying too much about the cost.In patent cases, the defendant is very often an individual inventor or innovator or other small businessperson who is being trolled by an organized extortion scheme. The troll shows up with a usually bogus patent claiming — usually falsely — to have pre-empted the inventor’s creation.It’s a very different dynamic from the usual big pocketed defendant cases where we can brush off the injustice of the vast expense of winning against an unjust accusation.

          1. In patent cases, the defendant is very often an individual inventor or innovator or other small businessperson who is being trolled by an organized extortion schemeHardly. Lawsuits are expensive, and if the person you are suing barely has any money to speak of in the first place, then the amount to be recovered isn’t worth the suit.Don’t confuse lawsuits with demand letters.

      3. Badger – A typical independent inventor with a valid, infringed patent simply cannot defend it in the proposed loser pays scenario. Surely you can see this. I’m not talking about a big NPE with lots of funding. I’m talking about a guy like the Wright Brothers, who in modern times would need to hire an attorney on contingency. Loser pays would eliminate contingency infringement lawsuits. I guess he could represent himself, but could he risk bankruptcy for his family? If you eliminate the ability of the independent inventor to defend his valid property, you eliminate one of the most important elements of America – the right to defend ones property. Badger, are you really OK with killing independent invention?

        1. First, independent invention has nothing to do with the ability to obtain contingency fee lawyers. I do not see change in the mechanics of patent litigation stopping inventors and entrepreneurs from doing their thing.Second, I’d challenge the idea that an inventor with a valid and infringed patent couldn’t get a lawyer to take a contingency fee case. Among other things, if a patent owner has someone dead to rights: contingency fee + attorneys fees (and you don’t even have to prove willful infringement).

          1. Independent invention has everything to do with being able to defend a valid patent. Even without Loser Pays, it is difficult to get contingency representation. Even then, the inventor typically has to pay ongoing attorney expenses that may be beyond him. Add Loser Pays and someone has to take the additional risk. Will the attorney? Maybe in the rarest, totally slam dunk case. Otherwise, the typical independent inventor would have to risk financial ruin. The reason American inventors have been able to “do their thing,” making America the leading innovator and leading economy in the world, is because they had a workable patent system behind them. The America Invents Act did a lot of harm, but the Goodlatte bill H.R. 3309 will kill independent invention where it involves anything of importance.

    3. The loser pays provision was just fine because it allowed the judges discression as to what constituted a frivioulious or abusive suit. But now theyve thrown the scales of justice in favor of the big pocket businesses and i dont think they even limited the number of discovery secessions to three to cut court costs and the intimidation of running out of money of the little guy discouraging initial filing to begin with and shuttering the patent system

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