By Dennis Crouch
Representative Bob Goodlatte (R-VA) with the bipartisan support of ten other members of the House has introduced a new set of proposed patent reforms currently tiled the “Innovation Act.” (H.R. 3309) The proposed bill includes a number of provisions disparate provisions that would have a substantial impact on patent enforcement, procurement, and ownership. Some of the changes include severe increases in the requirements associated with filing a patent infringement complaint; Major statutory limitations on discovery; Elimination of the patent applicant option of filing a civil action to obtain a patent under Section 145; Forcing the USPTO to use standard claim construction (rather than BRI) in post-grant proceedings; Introduction of a new Double-Patenting rule; etc. the 50+ page bill is somewhat complex and, as Hal Wegner wrote, “[e]very organization impacted by patents must carefully study the Goodlatte bill for hidden features or suffer the consequences.” [Text][Sectional-Analysis]
Major Proposed Changes include the Following:
- A heightened pleading requirement for filing patent infringement claims, including a particularized statement “with detailed specificity” as to “how the terms in each [asserted] claim … correspond to the functionality of [each] accused instrumentality.” A brand-generic infringement action under § 271(e)(2) need not comply with the heightened pleading requirements. In addition, the Judicial Conference would be ordered to modify the form complaint for patent infringement to reflect the heightened pleading.
- An assumption that attorney-fees will be awarded to a prevailing party. The new provision would require an award of fees “unless the court finds that the position of the nonprevailing party . . . was substantially justified or that special circumstances make an award unjust.” On its face the provision is largely party-neutral with two caveats. First, the provision allows prevailing-accused-infringers to collect fees from non-plaintiffs who have a substantial interest in the patent-at-issue in the case. Second, the provision indicates that a patentee who extends a covenant-not-to-sue to the other party will be deemed a non-prevailing party and thus subject to attorney fees.
- Discovery will be limited until after a ruling on claim construction. In addition, the US Judicial Conference would be ordered to develop rules “to address the asymmetries in discovery burdens and costs in any civil action [relating to patents].”
- Transparency of Ownership. As a new required disclosure, the patentee in an infringement litigation must disclose anyone with a financial interest in either the patents at issue or the patentee and must additionally disclose the “ultimate parent entity” of the patentee. In the appropriate Federal Regulations, an ultimate parent entity is ethereally defined as “entity which is not controlled by any other entity.”
- Stay for Customer Suits. When both a manufacturer and its customer are sued for infringing the same patent, customer suit would be stayed so long as the customer agrees to be bound by the results of that case.
- IP in Bankruptcy. Under the new law, when a foreign company goes bankrupt, its trustee would no longer have the power to cancel licenses associated with US patent rights.
- No Civil Action to Challenge PTO. The new law would eliminated the civil action option found in 35 U.S.C. § 145. Patent applicants refused by the patentee would rather only have the option of appealing directly to the Federal Circuit.
- Shrinking Post-Grant-Review Estoppel. Under the current law, a post-grant review proceeding creates an estoppel against the petitioner later arguing in other forums “any ground that the petitioner raised or reasonably could have raised during that post-grant review.” 35 U.S.C. § 325(e). The new law would narrow that estoppel only to grounds actually raised.
- Patent Office Claim Construction. During Post-Grant Reviews and Inter Partes Reviews, the new law would require the patent office to use the ordinary “district court claim construction” law, that is, “construing each claim of the patent in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent.”
- Double Patenting. There is some potential that the judicially created obviousness-type double patenting doctrine was eliminated by the recently implemented first-to-file regime. The new law would codify that doctrine.
- Covered Business Method Patent Review. The AIA creates an option for third parties to attack patents covering non-technological “covered business method” innovations through the use of a new post-grant review proceeding. The new law would somewhat restrict the scope of CBM review to only cover first-to-invent patents (rather than pre-AIA patents) as defined in Section 3(n)(1) of the AIA. The new law would also, inter alia, codify the USPTO’s somewhat broad definition of “financial product or service” described in the Versata case.
- Patent Term Adjustment. The new law would eliminate any patent term adjustment for “B delay” occurring after an applicant files a request for continued examination. This change would have a significant impact on the patent term of a large number of issued patents. The amendment proposes to be effective with regards to any “patent application or patent” pending on the Act’s date of enactment. (Note – it is unclear what it means for a “patent” to be “pending” in this context.)
- Federal Jurisdiction over Patent Cases. Although not a statutory change, the new law would make the “clarifying” statement that: “The Federal interest in preventing inconsistent final judicial determinations as to the legal force or effect of the claims in a patent presents a substantial Federal issue that is important to the Federal system as a whole.”