by Dennis Crouch
Although the Washington DC politics of patent law is somewhat confusing, the divide on tort reform is much more clear and the pending patent reform legislation in Congress is largely tort reform (but with a focus on patents). The Republican led House of Representatives passed the Goodlatte Innovation Act in 2013 (H.R.3309), but Democrats in the Senate have stymied the Bill’s progress despite support from the White House. With Senate control now in Republican hands, I expect that a revised version of the Innovation Act will be able to pass through both houses of congress in 2015 and be signed by President Obama.
Meanwhile, changes in the patent system since 2013 have somewhat tempered demands for reform. Particularly the Supreme Court took strong pro-defendant positions in Alice Corp (patent eligibility), Nautilus (indefiniteness), and Octane Fitness (attorney fees) and, at the same time, the new post-issuance review proceedings have proven to be effective mechanisms for challenging patents in parallel to court actions. Further, it is likely that Supreme Court will raise pleading standards for patent cases (by eliminating Form 18) this calendar year as part of a larger reform of the rules of civil procedure. Likely as a result of all of these factors, new infringement lawsuits are down as is the market-value of patents. To be clear though, pro-reformers are still calling for reforms and this may be low-hanging fruit for Republican lawmakers.
H.R. 3309 as passed includes:
- Substantially raising the pleading standards in patent cases – well above Iqbal and Twombly;
- Creating presumption of fee shifting and ability to join ‘interested’ parties to pay fees when a losing-patentee is under-capitalized;
- Severely limit pre-claim-construction discovery;
- Partially limiting the availability of pre-suit demand letters for proving willfulness when seeking punitive (willfulness) damages;
- Requiring transparancy of ownership;
- Allowing for stays of customer-lawsuits in certain situations;
- Narrowing the estoppel provision for Post-Grant Review filings; and
- Codifying double patenting.
Indications are that President Obama’s administration and USPTO Director Nominee Michelle Lee support these changes (with some modification) — making this an area of early bipartisan cooperation in the new Congressional term.