The politics of US patent law reform

This weblog has carried so much material concerning patent law in Europe that one might almost be forgiven for assuming that everything has gone quiet in the world's favourite market for innovation and patent litigation -- the United States -- and that some of the most colourful personalities in the world of patent infringement have given up their litigious ways and have taken up chasing llamas. But this is not so, as this guest post by Kevin Winters suggests. Here Kevin gives us a glimpse of some of the stirring action in the seething cauldron of US patent reform. This is what he writes:

The politics of US patent law reform

Law reform can be a tricky process.  The experience in the USA and the attempts to reform its patent system are good examples of this.  

In January this year the House of Representatives saw the reintroduction of the patent reform bill: the Innovation Act 2015. Followers of IP developments will be well aware of how controversial the debate over patent law reform has become.  The main thrust of this proposed legislation is to deal with so-called ‘patent trolls’ by changing the manner in which claims of patent infringement are handled in the US courts.  The new bill bears many of the same features of its predecessor: 

•        The holder of a patent that files a lawsuit will need to provide greater detail in support of their case: it would need to include infringement charts showing how each limitation to each asserted claim in each asserted patent is found within each allegedly infringing product or process; 

•        There would be the introduction of a presumption of attorney fees to the prevailing party for spurious claims of infringement; 

•        In any lawsuit, the patent owner would be obliged to disclose “the ultimate parent entity” of any assignee of the patent; and 

•        The courts will be required to establish the validity of the patent early on in the litigation process. 

The introduction of this piece of legislation was halted in the Senate last year, following fears that it was not proportionate to dealing with patent trolls, and could be detrimental to legitimate patent holders in the US.  Unfortunately these concerns have not disappeared.  Further, some commentators in the US have suggested that the bill does not take account of how much has happened in patent litigation since it was first introduced in 2014.  In particular, the Supreme Court has been unusually busy in dealing with patent law cases, and has taken some important steps to tackle spurious patent litigation.    There is however much support for the legislation, in both the political and commercial spheres, where there are those with the belief that the current patent regime is ineffective for dealing with patent trolling.  

Looking at the changes that the legislation proposes in the abstract, they seem to contribute to a robust system where cases are dealt with efficiently.  However when considered in context there are some concerns, particularly concerning the exact details of the proposed changes. The requirement that litigants go into greater detail in their pleadings regarding infringement could indeed help the litigation process.  However, lacking any guidance on exactly how much detail is needed, the courts will be left not knowing how high the standard of pleadings must be.  

Further, the Supreme Court has already heightened the standard of pleadings in civil cases, raising the question of whether greater detail is needed. In Ashcroft v Iqbal  556U.S. 662 (2009) the Court ruled that the requirement that a complaint have sufficient “factual matter” to be plausible will apply to all civil cases –  though it is not yet known whether this standard will be different to what is ultimately passed into law.  

Additionally, objectively speaking, there is a risk that the presumption of attorney’s fees could have a detrimental or ‘chilling’ effect on smaller enterprises that may lack the resources to enforce their patents. This point was recently emphasised by a number of leading US universities in a letter to Congress, arguing that: 

“The prospect of substantially increased financial risk would discourage universities and other patent holders lacking extensive litigation resources from legitimately defending their patents.  Moreover, this increased financial risk would deter potential licensees and venture capitalists from investing in university patents in the first instance, reducing the number of research discoveries that advance to the marketplace.” 

The full letter can be accessed here

While it is true that the landscape of patent litigation has changed since the Innovation Bill was first introduced, the political landscape has also undergone a dramatic change: both the House of Representatives and Congress host a strong Republican presence that supports the passing of the bill.  Moreover there appears to be increasing pressure from the business sector to implement this legislative change.

What will happen next? How does the scene look from closer to the Capitol? This Kat is sure that we will soon hear from some of our readers ...