Fresh on the heels of the Patent Quality Improvement Act (S.866) comes the Patent Abuse Reduction Act of 2013 (here) introduced yesterday by Senator John Cornyn (R-Tx). The newest Senate bill, like the one from earlier this month, also is designed to target patent trolls. While the earlier bill sought a way to short circuit high cost litigation through a more cost effective USPTO post grant review procedure, the newest bill seeks to create a loser pays system and completely revamps patent litigation pleading and discovery practices.
On the pleading side, the Bill proposes that simplistic Form 18 of the Federal Rules of Civil procedure (FRCP) be abandoned in favor of very detailed allegations that identify specific claims, infringing products/methods by name and model #, detailed claim mappings to each product, and a host of other information. The Bill also proposes a “pay to play” discovery system in which certain types of discovery are financed by the requesting party, and a loser pays outcome in certain situations.
The Bill is essentially a wish list of every company that has ever been sued by a troll, but does it throw out the baby with the bath water?
The recent flurry of legislative effort to combat trolls is understandable, and many would argue long overdue. Yet, the system can’t be torn down to the point that it becomes worthless to everyone. For example, while trolls certainly benefit from the notice pleading standard (Twombly aside), such pleadings are actually necessary in many disputes between technology companies as the internal operation of many high tech devices can only be confirmed after discovery. Likewise, rather than carve out special exceptions to the FRCP for patent cases, the more sensible solution seems to be embodied by Senator Schumer’s bill (which builds on a reform that is already stopping trolls and disrupting their business model); namely, take the troll out of the high cost venue so they can no longer leverage cost inefficiencies to extort settlements.
Right now the Bill is just an opening bid, and I suspect it will need to be watered down significantly to have any chance at passing into law. Simply stated, making patent litigation more expensive for plaintiffs might kill trolls, but at the expense of the very companies the legislation is seeking to help. Higher plaintiff costs will make it impossible for small tech companies to compete and negotiate with the market behemoths on patent issues.