Update on Pending Patent Law Reform + 10X

April 29, 2014

mdma-baltimore-nov-2014-conferenceIt has been more than two and a half years since the Leahy-Smith America Invents Act (AIA) was signed into law. (See MedTechBrief of September 16, 2011) The AIA took more than six years of negotiation and marked the most significant change to the U.S. patent system since 1952. While various provisions of the AIA were still being implemented last year, Congress began introducing further patent reform legislation. Between February 2013 and March 2014, the House of Representatives introduced six separate patent reform bills, and the Senate introduced another six bills. While the AIA’s main impact was focused on reforming procedures at the U.S. Patent and Trademark Office, the focus of the twelve bills currently pending in Congress is more on federal court litigation proceedings. Key provisions of these bills include heightened standards for pleading patent infringement, fee-shifting (losing party pays attorney fees and costs for both parties), joinder, bonding, discovery and expenses, patent ownership transparency, stays of customer suits, bad faith demand letters, and expansion of “covered business methods.”

The two main bills are H.R. 3309, the Innovation Act introduced by Chairman Goodlatte (R-VA) on October 23, 2013, and S. 1720, the Patent Transparency and Improvements Act of 2013, introduced by Chairman Leahy (D-VT) on November 18, 2013. Both of these bills initially moved along very quickly, with an amended version of H.R. 3309 overwhelmingly passing the House in December. The Senate bill, however, remains in the Judiciary Committee which was scheduled to mark up and vote on the bill in early April. Chairman Leahy has now postponed these proceedings four times in the last few weeks as committee members attempt to strike a balance between a bill that discourages patent “trolls” but does not punish legitimate innovators.

Federal Circuit Chief Judge Randall Rader has provided measured support for the pending reform bills, but indicated yesterday that the judiciary is better suited to deal with litigation abuse. On Thursday, the former director of the U.S. Patent and Trademark Office, David Kappos, called on current U.S. patent officials to resist the push for legislation aimed at cracking down on so-called patent trolls, which he said would undermine patent rights. Various medical device groups, such as the Medical Device Manufacturers Association, and the Alliance of U.S. Startups and Inventors for Jobs, have been urging Congress to craft legislation narrowly when going after patent trolls, to avoid weakening the U.S. patent system for other patent owners.

An unintended side effect of the pending legislation was a massive rush to file patent infringement law suits on April 23, 2014. This stemmed from an informally proposed amendment to the Senate bill that was distributed the previous weekend. The proposal included a clause for retroactive application – naming April 24 as the effective date of the attorney fee shifting provisions, regardless of when the bill becomes law. The result was the filing of about 180 new infringement suits on the 23rd, more than five times the daily average.

It remains to be seen in the coming weeks how the key provisions will be addressed in the amended version of the Senate bill. If the bill makes it out of committee and is passed by the Senate, it will then need to be reconciled with the House bill in conference committee between the House and Senate before the legislation can be presented to President Obama for signature.

Also related to fee shifting, the U.S. Supreme Court decided two cases yesterday that provided district courts with broader discretion in awarding attorney fees in patent litigation. Octane Fitness v. Icon Health, and Highmark Inc. v. Allcare, both had unanimous decisions. In these companion cases, the Court has eliminated an important safe-harbor created by the Federal Circuit to protect plaintiffs. In the past, awarding attorney fees to the prevailing party was not allowed based upon filing a losing case unless the case was “objectively baseless.” That safe-harbor has now been removed, as well as the “clear and convincing” evidence standard that previously needed to be met before attorney fees could be awarded.

Contact me for further details on pending patent law reform or to be connected with others who are engaged in the reform process.

The 10X Medical Device Conference, May 12-14, 2014 Minneapolis, MN

The Medical Devices Group is described as the world’s largest medical device community and the industry’s only spam-free, curated forum for intelligent conversations with medical device thought leaders. The 10X conference is a once-a-year chance for Medical Devices Group members to come offline and meet in person. The conference is designed for medical device professionals involved in leading their company’s strategic direction, looking for inspiration and strategies for their company’s next phase of growth.

Doug Limbach was a featured Speaker: http://medicaldeviceevents.com/speakers/doug-limbach/

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