Senator Schumer Readies Second Round of Patent Reform

Although many of the more significant changes to U.S. patent law provided by the America Invents Act (AIA) are only months old, Congress is already considering a re-calibration of these changes. Over the past few months the patent troll dilemma has been given significant attention by Congress and politicians are now clamoring to fashion legislation to address the problem. While the “SHIELD Act” has been discussed for the better part of the last year, and rewritten in that time frame, lawmakers are well aware that this “loser pays” proposal is significantly flawed and a non-starter in a political sense. As a result a new legislative solution is rumored for consideration by Congress next week. The new bill will propose an expansion of the patentability trial mechanisms of the AIA.

While the legislation is not yet public, Senator Charles Schumer (D-NY) will introduce legislation that will force trolls to the USPTO before they can file a lawsuit. (Senator Schumer was the force behind the Transitional Program for Covered Business Method (CBM) Patents) It is unclear exactly how this “PTO first” control will be mandated. The new legislation is rumored to remove the “transitional” nature of the CBM program and to expand the standing required for a CBM proceeding to include any patent asserted by a patent troll.

One might argue that the legislation is unnecessary since any defendant can already seek review at the USPTO via CBM or Inter Partes Review (IPR). In fact upward of 50% of such filings already relate to troll suits. Yet, the intent here seems to be to provide the expanded scope of CBM (any statutory defense to invalidity) for troll asserted patents. Also, while any patent can be challenged at least as to some grounds at the USPTO, that doesn’t mean that the courts (I’m talking about you Texas) will stay their proceedings pending review. Of course, the CBM statute has additional teeth in this regard, not to mention a more liberal estoppel standard.

Interestingly, the USPTO is now forced to cut capital expenditures to account for sequestration of funds. Perhaps Congress should provide the USPTO its full budget allocation before making the Patent Trial & Appeal Board (PTAB) the busiest patent court in the U.S.

Keep calm and work harder PTAB.