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USPTO Solicits Comments on Small Claims Court for Patent Disputes

Posted On: Dec. 20, 2012   By: Scott A. McKeown
small claims patentBusiness-to-Business Initiative Drives Government Interest

Small technology companies and start-ups face a daunting task in enforcing their intellectual property due to the cost prohibitive nature of patent litigation. In year’s past academics and major bar associations would often brain storm as to how these market participants (as opposed to NPEs) might be able to cost effectively get a fair shake in the U.S. patent system. Back in 1989, an idea was floated that perhaps the government could help out by establishing a small claims court of sorts to allow such small players an opportunity to prove their case.

For example, where relatively small amounts of licensing revenue/damages are at stake, (e.g., 3 million or less)  it is frustrating for small organizations to be faced with a legal bill of equal value to the potential recovery. Although these goals are far from clear in this week’s Federal Register Notice (here), the USPTO  is soliciting commentary on the concept of creating a small claims court that would be voluntary in nature, likely exclude NPEs, and focus on small (a few million or less) business-to-business disputes

Specifically, the USPTO wants to know if there is a need for such a court and the general ideas of the public on how such a court would operate, the proper venue, arbiters, pleadings, etc. 

Again, although unstated in the Notice, one idea is to build on the existing Patent Pilot Program of the District Courts. While not every district participates in this program, those located in inconvenient venues might seek out the U.S. Court of Federal Claims as a default venue. Although not widely know, this court routinely considers patent disputes centering around government and defense related activities. The concept is to voluntarily allow some disputes to be heard by this tribunal with limited discovery, and a fast track decision.  As roughly 3.4% of patent cases make it to trial, it is believed that such a program, perhaps limited in duration as a pilot program, would more cost efficiently drive such “small claims” B2B disputes to a more market effective solution. 

(Note: This post has been updated from the original version to expand upon the broader based policy rationales, which were unfortunately left out of the Notice)

2 Responses to “USPTO Solicits Comments on Small Claims Court for Patent Disputes”

  1. Paul F. Morgan says:

    Good points. What inventors could get from a small claims court may well be less than what those now being sued by contingent fee lawyers will pay just to get out of expensive patent lawsuits?

    Also, if they really wanted cheaper patent litigation they could offer a volunteer or low fee compulsory arbitration plan. I would bet many companies would accept that IF it was ever offered to them.

  2. Paul,

    My earlier post was off the mark. I have been informed by those involved in the concept that since NPEs would never agree to such a voluntary system, they would likely be excluded by design.

    The proposal is interesting, I’m just not sure how it fits in with the new AIA challenges. For example, IPR would likely be cheaper in my view, and for that reason, perhaps more attractive to a defendant than any court proceeding. Perhaps there is a way to merge the new AIA mechanisms with these ideas on the back end for those patents that survive USPTO scrutiny.