New Executive Actions Largely Political Props
With little progress being made in Washington DC these days on hot button issues such as immigration, health care, or debt control, the White House is once again going back to the patent reform well. The latest round of political theater occurred last Thursday when the White House announced yet another round of ”executive actions.” Like the earlier round, these also recycle ongoing PTO programs and initiatives as ”new ideas” of the administration.
The latest initiatives include providing a web page of resources for those facing patent troll suits, a program to encourage the USPTO to “crowdsource” for prior art, and additional seminars for patent examiners to keep them up to date on changes in technology and functional claiming. Of course, the PTO has been cooperating with industry on technology seminars for years, and the peer-to-patent program was introduced in 2007 to leverage crowdsourcing.
As an aside, the PTO now has a page of PTAB decisions on functional claiming, which I find useful.
Hearings End, Leahy Bill to Reemerge on Fast Track
Last Friday, the Senate Judiciary Committee concluded a round of additional staff hearings on pending Senate Bills S.1720 (Leahy) entitled Patent Transparency & Improvement Act. The hearings focused on the concerns of universities, small inventors, and restauranteurs/retailers with the currently proposed legislation. At the same time, the Committee considered refinements to the Bill, including the value in adopting one or more of the concepts expressed in related Senate Bills 1612 (Hatch), 1013 (Cornyn) and 866 (Schumer).
At the forefront of these deliberations is the concern to balance “unintended consequences” with the goal of eliminating frivolous patent suits, especially those targeting downstream users of off-the-shelf products. With the legislative effort completed in the House by the passage of the Goodlatte Bill, and the Senate coming down the home stretch with their companion bill, president Obama took the bold step of calling on Congress to reform patent law in his recent State of the Union address….you see where this is going.
USPTO Proposes Attributable Owner Requirements
Last week, the USPTO released a Notice of Proposed Rulemaking (NPRM) entitled Changes to Require Identification of Attributable Owner. The proposals would heap significant new administrative requirements on patent owners in the name of thwarting abusive patent suits. The agency explains the new reporting requirements will, in part, reduce risk of abusive patent litigation by helping the public defend itself against such abusive assertions by providing more information about all the parties that have an interest in patents or patent applications.
The proposal is unlikely to cause any kind of meaningful relief for companies targeted by patent trolls. Unfortunately, this effort is being driven from the White House. The PTO is fully expecting the firestorm that is coming to push back on this misguided mandate….unleash the fury.
Patent Reform Effort Returns to Senate
The Senate Judiciary Committee will be scheduling additional staff hearings in the coming weeks on the potential impact of the proposed Patent Transparency & Improvement Act. The additional briefings are responsive to concerns of “unintended consequences” expressed during the last hearing, which was held in late December 2013. The additional hearings are expected to explore the concerns of universities, small innovators and new, smaller targets of evolving patent troll tactics.
With the House passing the Goodlatte Bill in short order at the close of 2013, Patent reform remains a hot issue. It is expected that Congress will continue to move forward at an accelerated pace so that some type of “reforms” can be in enacted into law in the first half of 2014. Given the fast track, it seems unlikely that major changes will be made to the Bill at this point in the legislative process.
PTAB Review Proceedings Force Change to Age Old Patent Prosecution Paradigm
As Bob Dylan once warned, you better start swimmin’ or you’ll sink like a stone….the times they are a changin.‘ While Bob clearly had some broader ranging social issues on his mind when he penned those lyrics, they are quite befitting of the outdated philosophies driving most U.S patent prosecution practices in the aftermath of the America Invents Act (AIA).
I’m not talking about the change over in March 2013 from the first-to-invent system to the first-inventor-to-file system of the AIA, but instead, the de facto switch in September 2012 from the “infringement first” philosophy of patent prosecution to the new, balanced patentability/infringement model. That is, before the introduction of the AIA post grant challenge mechanisms, Inter Partes Review (IPR), Post Grant Review (PGR), and the transitional program for Covered Business Method Patents (CBM), securing a maximum claim breadth was the primary driver of patent prosecution practices — the broader the better.
The infringement first philosophy is now dead— as will be your patent portfolio unless you change your tune.
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Virginia Joins Vermont, Nebraska and Others
Yesterday, the Virginia House of Delegates introduced House Bill No. 375, entitled Bad Faith Assertions of Patent Infringement. The bill tracks, in part, similar consumer protection bills introduced in Nebraska and Vermont. Nebraska has taken the matter a step forward and is now proposing that bad faith letters constitute deceptive trade practices, subject to criminal penalties.
These statutes can complicate matters for the handful of trolls that rely on letter writing campaigns for quick, $10,000 settlements (often mailing hotels and restaurants, claiming to own laser printing and/or basic WiFi concepts). These types of trolls are a relatively recent phenomena.
Meanwhile, the Senate is expected to turn to patent reform this month. As a reminder, with the Innovation Act (HR 3309) passed by the House a few weeks back, the Senate is expected to move forward on the companion bill in a matter of weeks.
Senate Judiciary to Webcast Hearing on Leahy Bill
Next Tuesday the Senate Judiciary Committee will hold a hearing entitled Protecting Small Businesses and Promoting Innovation by Limiting Patent Troll Abuse. The 10 AM hearing will be webcast. A witness list is not yet available. The hearing will focus issues for possible mark up so that the Senate Bill can be fast tracked in early 2014. The Senate effort is expected to track the Goodlatte bill to avoid, or significantly minimize issues for conference.
Patent Reform Debate Moves to Senate in January 2014
Yesterday afternoon, the Innovation Act (H.R. 3309) passed through the House with ease by a vote of 325-91. The bill was quickly debated (3 hours) and only slightly amended. The one noteworthy change was the removal of the provision designed to repeal 35 U.S.C. § 145. As a reminder, 145 actions allow unsuccessful applicants for patents to challenge the denial of patent protection by the USPTO in District Court rather than the Court of Appeals for the Federal Circuit (CAFC). (The main benefit of the district court route over the CAFC is the ability to introduce new evidence).
145 actions are exceedingly rare. When instituted such suits can be a significant drain on the Solicitor’s Office of the USPTO, hence the original proposal to repeal 145. It seems legislators failed to realize some patentees like having an option 99.9% will never use.
With the House bill passed, debate will head to the Senate. It is expected that the Leahy bill will be revised to track H.R. 3309 so that conference can be avoided, and “reforms” can delivered for presidential signature in the early weeks of 2014.
Innovation Act Heads to Floor Debate for Last Push in 2013
Now that the Goodlatte Bill, also knows as the Innovation Act (H.R. 3309), has been reported out of the Judiciary Committee there will be a second round of amendment opportunities. The new amendments will be collected from house lawmakers on Monday December 2nd, and the Rules Committee is expected to calendar floor debate shortly thereafter (likely Wednesday or Thursday). It is expected that some of the same amendments that failed during committee markup will be reintroduced, along with a raft of others. Post grant patent issues are expected to be hotly debated, especially those pertaining to the potential expansion of Covered Business Method (CBM) patent challenges.
The Innovation Act remains on the fast track heading into the close of 2013. Meanwhile, the Leahy Bill will sit idle for the time being. While significant progress can be made in the next few weeks, it seems unlikely that any legislation will be passed into law until early 2014.
Critical Technical Fix to CBM Statute Left out of Leahy Bill
Wasting no time…the Senate has quickly introduced a companion bill to H.R. 3309. The senate bill (here), sponsored by Senator Leahy of Leahy-Smith America Invents Act (AIA) fame, largely tracks the post grant related provisions of the existing house legislation — with one major difference. The Leahy bill does not include the technical fix to the Covered Business Method (CBM) provisions of the AIA, Section 18(a)(1)(C)(i). This fix is included in the Goodlatte bill to permit CBM challenges on prior art qualifying under 35 U.S.C. § 102(e). 102(e) is a critical class of prior art for business method patent challengers.
As explained previously, the exclusion of 102(e) was a drafting mistake of the AIA. This drafting error significantly degrades the appeal of CBM for business method patent challengers. While mark-up and evolution of H.R. 3309 /Senator Leahy’s Bill will certainly continue, it is disturbing that this critical fix was seemingly deliberately left out of the Senate bill.